Full text of "The Union Pacific Railway; a study in railway politics, history, and economics"

See other formats

Google

This is a digital copy of a book that was preserved for generations on library shelves before it was carefully scanned by Google as part of a project

to make the world's books discoverable online.

It has survived long enough for the copyright to expire and the book to enter the public domain. A public domain book is one that was never subject

to copyright or whose legal copyright term has expired. Whether a book is in the public domain may vary country to country. Public domain books

are our gateways to the past, representing a wealth of history, culture and knowledge that's often difficult to discover.

Marks, notations and other maiginalia present in the original volume will appear in this file - a reminder of this book's long journey from the

publisher to a library and finally to you.

Usage guidelines

Google is proud to partner with libraries to digitize public domain materials and make them widely accessible. Public domain books belong to the
public and we are merely their custodians. Nevertheless, this work is expensive, so in order to keep providing tliis resource, we liave taken steps to
prevent abuse by commercial parties, including placing technical restrictions on automated querying.
We also ask that you:

+ Make non-commercial use of the files We designed Google Book Search for use by individuals, and we request that you use these files for
personal, non-commercial purposes.

+ Refrain fivm automated querying Do not send automated queries of any sort to Google's system: If you are conducting research on machine
translation, optical character recognition or other areas where access to a large amount of text is helpful, please contact us. We encourage the
use of public domain materials for these purposes and may be able to help.

+ Maintain attributionTht GoogXt "watermark" you see on each file is essential for in forming people about this project and helping them find
additional materials through Google Book Search. Please do not remove it.

+ Keep it legal Whatever your use, remember that you are responsible for ensuring that what you are doing is legal. Do not assume that just
because we believe a book is in the public domain for users in the United States, that the work is also in the public domain for users in other
countries. Whether a book is still in copyright varies from country to country, and we can't offer guidance on whether any specific use of
any specific book is allowed. Please do not assume that a book's appearance in Google Book Search means it can be used in any manner
anywhere in the world. Copyright infringement liabili^ can be quite severe.

About Google Book Search

Google's mission is to organize the world's information and to make it universally accessible and useful. Google Book Search helps readers
discover the world's books while helping authors and publishers reach new audiences. You can search through the full text of this book on the web

at |http: //books .google .com/I

THE

UNION PACIFIC RAILWAY

A STUDY IN RAILWAY POLITICS, HISTORY,

AND ECONOMICS

JOHN P. DAVIS, A.M.

^ ^ ^ ^ ^

• • X

M X A >» •^

• o ^ .' J

3 o o a ^

'*/ think there is a history about that matter which ought to be ptttlSsJied^ttr'-^^
the country,** — e. b. washburne.

^ ^ •J
jjj O J J

The public interest urges prompt and efficient action** — president "'c^EVELAitii'' ".

J J ~> -J •> ^jjj„

■J J

J ^ •> J ^ J ^ yt

• J ^ > ■' ^ .

- -• J ■« -" " ■' .

. J ^ -• • . ^

"= -- ^ ^ ^ -•

, ~ -' ^ J yJ yJ ^

» - * «* - J J

5* ^ *>jit-' J-'-^'-

J ^ ^ <J ^

^ V

J J .J ■a o ''

■> ^ •>

CHICAGO
S. C. GRIGGS AND COMPANY

1894

« ■

»o

f >

• ••••

• • •

• •••

• • ••

• • • • • • • •

• • •

10 8 9 5 1-

• • •

• ••••

• •• ••

• • • • •

• • •

• • •• • •

• * •••••

•• •• ••,

•• •• •

•••• •

• ••• •

• to

V V W W

R, R. DONNELLEY A SONS CO.. CHICAGO

TABLE OF CONTENTS.

INTRODUCTION, - - . - ^

CHAPTER I.— Genesis of the Pacific Railway.

The Emigrant article, 13. Barlow's suggestion, 14. Clarke's article, 15.
Boggs' article, 15. Benton's prediction, 15. Hunt's prediction, 15.
Parker's prediction, 16. Mills' claim, 16. Carver's claim and article, 17.
Plumbe's pamphlet, 18. Advocacy of new projects, 18.

CHAPTER II.— Asa Whitney.

Origin of Whitney's scheme, 19. Philanthropy, 19. First memorial to Con-
gress, 20. Colonization scheme, 21. Whitney bill of 1850, 22. Syste-
matic public agitation, 24. Nature of Whitney's public meetings, 24.
Meetings at Philadelphia and New York, 24. Success of public agita-
tion, 28. Sum total of Whitney's work, 28. 28th Congress, 29. Whitney's
second memorial, 29. a9th Congress, 29. Whitney's third memorial, 30.
30th Congress, 30. Appropriation for surveys, 31. Whitney's book, 31.
Climax of Whitney's efforts, 31. 31st Congress, 32. Last Whitney bill,
33. 32d Congress, 33. Anticipated obstacles to Pacific Railway, 33.

CHAPTER III. — Sectionalism and Localism.

Pacific railway as an early national project, 35. Early absence of local ques-
tion of termini, 36. Influence of annexation and development of new
territory, 36. Objections to railway building by state, 37. "Storm and
stress," 38. Eastern interest, 38. Saint Louis interest, 39. Memphis
interest, 40. Charleston interest, 41. Texas interest, 41. North and
South, 42. 32d Congress, 44. Gwin bill, 44. " Magnificence " of Gwin
bill, 45. Amendments relating to routes and termini, 46. Adams, Chase
and Bell amendments, 46. Bell's prophecy, 47. Rusk bill, 47. Efforts to
reconcile conflicting interests, 48. Opposition of Democrats, 49. Prac-
tical, political considerations, 49. New conditions in 1862 and 1864, 50.
Brooke, Brodhead and Shields amendments, 50. Death, resurrection,
second death and obsequies of Gwin and Rusk bills, 51. Appropriation
for surveys, 53. Annual message of President Pierce, 53. 33d Congress,

O THE UNION PACIFIC RAILWAY.

53. A " Buncombe " bill, 54. McDougall bill in house, 54. The Alle-
ghanies, the Mississippi, and the Pacific railway, 54. Northern Pacific, 57.
Surveys under Jefferson Davis, 59. Five Pacific railway routes, 59. Con-
tents of reports, 59. Jefferson Davis' conclusion, 60. 33d Congress, 60.
Douglas bill, 61. Mason's amendment, its inspiration and effect, 63.
Parliamentary experience and defeat of Douglas bill, 64. " Individual confi-
dence," 66, Change from national to individual view, 66. Benton's
"confidence," 67. Southern "confidence," 68. Bliss' view of Douglas
bill, 68". Not the only but the first Pacific railway the question, 69. Self-
assertion of people in 1855, 70. Stagnation in 34th Congress, 70. Appar-
ent favorable conditions in 1857, 72. Democratic and Republican plat-
forms of 1856, 72. Buchanan's California letter, 73. Inaugural address
and first annual message, 73. Buchanan's view of the constitution and his
Southern sympathies, 74. Annual reports of Secretary Floyd and Post-
master General Brown, 75. Disposition of President's message of 1857,
77. 35th Congress, 77. Bennett's resolution, 77. Senate bill of 1857-
1858,78. "Equality of Opportunity" bill, 78. Seward's confession, 80.
"Outward expression" of North vs. South feeling, 81. Jefferson Davis'
• amendment, 82. Northern fear of Buchanan's Southern sympath"es, 83.
Iverson's statement of attitude of South, 84. Doolittle's amendment, 86.
Hale's irony, 86. Green's amendment, 86. Wilson-Bigler amendment, 86.
Wilson's national amendment, 87. Passage by Senate of metamorphosed
"Equality of Opportunity" bill, 87. Excitement on passage of bill, 88.
Amendment of title, 89. 35th Congress, second session, proceedings in
House, 89. Pacific railway corporation, 89. Buchanan's annual message
of 1859, 89. Conditions in 36th Congress, 90. Curtis bill, passage by
House, passage by Senate with amendments, desertion by House, 90.
Gwin's opinion, 95.

CHAPTER IV.— The Charter.

Republican and Democratic platforms of i860, 96. Short session and special
session of Congress, 1860-1861, 97. Conditions favorable to Pacific rail-
way, 97. Three conflicting interests, 99. Three Pacific railway bills in
each House, 99. Work of House Committee on Pacific railroad, 1861-
1862, 100. Provisions of Rollins' " Union " bill, passage by House, amend-
ments of Senate, 100. The "Initial Point," 102. Bill passed by House
1862, 103. Nature, powers and duties of corporation created, 103. Aid
by land grant, 105. Aid by loan of government bonds and security for
repayment, 105. Central Pacific, 107. Branch lines, 107. Consolidation
of companies, 109. Lines of telegraph, 109. Congressional control of
rates, 109. Reserved power of amendment, no. Annual reports of com-
panies, no. "Saving the charter," in. McDougall bill of 1862-1863,

TABLE OF CONTENTS. 7

III. Gauge of Pacific railway, 113. Question of "adequate induce-
ments," 115. Inflation of national power, 115. Reaction against Pacific
railway, 116. Pacific railway brigands, 116. Ransom demanded, 117.
Congressional situation in 1864, 117. Passage of Senate bill, 1863-1864,
118. Guaranteed interest on bonds, 119. New "Initial Point," 119. House
bill of 1864, 119. Holman amendment, 120. Washburne's philippic, 120.
Pruyn's three amendments, 122. Wilson's and Dawes' amendments, 123.
Passage of House bill, 123. Conference committee, 124. Act of 1864,
124. The lobby, 125. Hasty legislation, 125. Right of way, 126. Inter-
nal changes in corporation, 127. Increase of land grant, 127. Increased
"adequacy" of loan of bonds, 128. Union Pacific, Eastern Division, 129.
Reserved power of amendment, 129. The Union Pacific and the constitu-
tion, 129. Steps in constitutional advance, 131. The Union Pacific and the
Rebellion, 133.

CHAPTER v.— Done!

Deification of Pacific railway, 136. Elements of adventure and romance, 137.
Rapidity, difficulties and military character of construction, 138. Settle-
ment of line, 143. Life in " Headquarters Towns," 144. Relative length
of Union Pacific and Central Pacific, 148. Greatest railway race, 149.
Overlapping of rival lines, 151. Point of junction, 151. Salt Lake City
and the Pacific railway, 152. "Driving the last spike," 153. Date of
completion of the Union Pacific, 156. Question of eastern terminus, 160.
Significance of construction of Pacific railway, 161.

CHAPTER VL— Credit Mobilier.

Organization of Union Pacific Railroad Company, 163. Pennsylvania Fiscal
Agency, 164. Union Pacific and Credit Mobilier, 165. Hoxie contract,

166. Boomer contract, 166. Durant quarrel, 167. Oakes Ames contract,

167. Seven Trustees, 168; Davis contract, 169. Effect of Credit Mobilier
manipulation, 169. Profits of construction of Union Pacific, 170. Dispo-
sition of Union Pacific land grant, 173. Unnecessary enhancement of cost
of Union Pacific, 173. Union Pacific and Credit Mobilier as Mephisto,
174. McComb disagreement, 175. Three Ames-McComb letters, 175.
Political scandal and sensation, 177. Poland and Wilson committees of
investigation and their reports, 178. Report of Committee on the Judici-
ary, 179. Roll of implicated members and ex-members, 180. Resolutions
of expulsion of Ames and Brooks, 188. Butler's resolution, 188. Agree-
ment to Sargent's resolution of condemnation of Ames and Brooks, 189.
Senate resolution of expulsion of Patterson, 190. Death of Ames and
Brooks, 191. Credit Mobilier edict, 191. United States vs. Union Pacific
Railroad Company, et al., 193. Inglorious end of Credit Mobilier sensa-

8 THE UNION PACIFIC RAILWAY.

tion, 196. Typical character of Credit Mobilier, 196. Origin of construc-
tion companies, 197. Sectionalism and localism in Congress, 200. Oakes
Ames philosophy, 201. " Satan rebuking sin," 202.

CHAPTER VII.— Thurman Act.

Union Pacific among wolves, 203. Dawes resolution, 203. Joint resolution of
April, 1869, 205. Removal of causes, 206. Question of rates, 207.
Interest question, 208. Opinon of Attorney General Akerman, 210.
Action of Congress and the Treasury Department, 210. Hostile legislation
of 1873,210. Decision of "interest case," 211. Net earnings question,
212. Decision of "net earnings cases," 214. Thurman Act, 215. Defini-
tion of "net earnings," 216. Sinking fund, 216. Prohibition of divi-
dends, 217. Reserved power of amendment, 218. Decision of "sinking
fund cases," 219. Contrast of moral and legal views of decision, 220.
Failure of sinking fund scheme, 222. Remedies suggested, 223. United
States Pacific Railway Commission, 224.

CHAPTER VIII.— Present and Future.

Rapid increase of Pacific railway debt to government, 225. Three ways of
disposition open to Congress, 226. General considerations, 227. Extra-
ordinary circumstances, 227. Theoretical attitude of Congress to railways,
229. Unreasonable inferences from Pacific railway history, 230. Erro-
neous popular impressions, 231. Preservation of sovereign dignity of
United States, 232. "Winding up" plan, 232. "Sinking fund" plan,
239. " Refunding " plan, 240. Future possibilities, 242.

NOTE. — The Receivership and Reorganization, ... 243

INTRODUCTION.

The work of the student of history has heretofore been
confined almost wholly to the political, religious and liter-
ary development of peoples; their industrial development
has been subjected to inexcusable neglect. Yet the pillars
•of the dominance of the Anglo-Saxon race are its superior
industrial attributes. What a people accomplishes industrially
and how it accomplishes it go far to determine how it will
be governed, what it will think and feel, and what it will
write. The freedom of the individual that was the product
of the eighteenth century has been more emphatically man-
ifested in the field of industry than in any other field of
human activity. The growth of constitutional government
in England is easily traced to the want of harmony be-
tween the old political status and the newly developed indus-
trial status of English society. The increasing tendency to
submit international disputes to arbitration is attributable not
so much to a more enlightened repugnance to warfare as to
the mere human fear of destruction of wealth and interfer-
ence with industries occasioned by it. The Annapolis Con-
vention had its origin in the desire of the American states
■^'To consider how far a uniform system in their commer-
cial relations" might "be necessary to their common inter-
ests." The slavery question was largely an industrial ques-
tion, and its solution was industrial, not political or moral ;

the event of the Rebellion was not a decision that Webster

10 THE UNION PACIFIC RAILWAY.

was a more skillful interpreter of the Constitution than was
Calhoun, or that slavery was morally wrong and freedom mor-
ally right, but simply that the North was stronger than the
South, that a form of society based on free labor was stronger
than one based on slave labor, and had produced greater
material results. If the political, religious and literary con-
ditions of the present day may be understood aright, it is
only by studying them in the light of past and present
industrial conditions. From this point of view, the study
of the origin, growth and present status of the Union Pacific
Railway as a type of the transcontinental railway systems of
the United States — the result, and reactively the cause of
industrial conditions of the greatest moment — can hardly
fail to be productive of more than passing benefit. The
internal development of the Union Pacific and its relations
to the individual citizen have been so similar to those of
other American railways that little space will be given to
them in these pages; its relations to the whole people and
to the United States, the political embodiment of the peo-
ple, will receive most attention.

It will be found that the Union Pacific is an exceptional
manifestation of a rapidly expanding people's economic need
of industrial instruments, and of its willingness to overleap
political barriers to obtain them and strain legal principles
to control them. The agencies through which this particu-
lar instrument was obtained and applied to use will be found
seriously out of harmony with settled political and moral
principles, and the latter distended and strained to subserve
unusual industrial purposes. Finally, settled principles of
law will be found to have been inadequate in this case to
attain the ends of abstract justice, and the term justice itself

INTRODUCTION. . II

to have been offered a new and strange definition in
response to the demand of a dangerous industrial outgrowth.
In the uncertain groping of statesmen, jurists and "indus-
trial captains," manifestoes and edicts in place of laws and
judgments, and "manipulations" in place of free individual
activity, have afforded convincing proof of the obscurity in
which the relations of social principles are involved.

The present practical question of the Pacific railway debt
is of the highest importance in that it involves the possible
loss to the United States of one hundred and twenty -five
millions of dollars, with the dangerous alternative of a radical
departure from the previous industrial policy of the govern-
ment and people of the United States. If one hopes to
discover a true solution of the question, it is only by a
scientific study of the subject in its origin, development and
present status.

CHAPTER I.

GENESIS OF THE PACIFIC RAILWAY.

Though the idea of uniting the Atlantic and Pacific by a
railway, or system of railways, or connecting railways and water-
ways, may have occurred to several minds in different places
at about the same time, and though it was the natural result of
industrial and political conditions, it was probably first given
public expression in the Emigrant^ a weekly newspaper published
at Ann Arbor, Michigan (Territory) from November i8, 1829, to
December i, 1834. ^^^ writer of the article, found in the
editorial columns of number XII. of Volume III., issued February
6, 1832, is unknown, though it should probably be accredited
to Judge S. W. Dexter, the publisher and one of the editors
of the paper. Under the title of " Something New," the
unknown writer, after a quite profuse apology for suggesting a
scheme that might be regarded by an incredulous public as
chimerical and visionary, and after consoling himself with the
reflection that "it is nobler to fail in a great undertaking than
to succeed in a small one," elaborates his proposed scheme in the
following paragraphs :

" The distance between New York and the Oregon is about
three thousand miles, — from New York we could pursue the most
convenient route to the vicinity of Lake Erie, thence along the
south shore of this lake and of Lake Michigan, cross the Missis-
sippi between forty-one and forty-two of north latitude, cross the
Missouri about the mouth of the Platte, and thence on by the
most convenient route to the Rocky Mountains, near the source
of the last named river, thence to the Oregon, by the valley of the

14 THE UNION PACIFIC RAILWAY.

south branch of that stream, called the southern branch of Lewis'

tit
river.

"We hope the United States will not object to conducting

this national project But if the United States

would not do this Congress would not, we presume,

object to the organization of a company and a grant of three
millions of acres for this purpose."

This article was to be the first of a series of articles,' but the
succeeding articles, if published, cannot be found, though many
of the later issues of the paper are lost or destroyed and the
writer's intention may have been executed.^

Soon after the appearance of the article in the Emigrant,
Samuel Bancroft Barlow, a practising physician at Granville,
Massachusetts, contributed to the Intelligencer, a newspaper pub-
lished at Westfield, Massachusetts, an article in which he pro-
posed the execution of the project of a railway to the Pacific
by the following means :

" I have a method to propose by which this work can be
accomplished by our general government at the expense of the
Union." " Let preliminary measures be taken for three years
to come, such as making examinations, surveys, lines, estimates,
etc., etc., at the end of which time, the public debt being paid,
the national treasury overflowing (I presume also that the
present duties and taxes, indeed every source of revenue, be
continued at their present rates), then let the work proceed with
all possible and prudent speed and vigor, to a speedy and per-
fect completion, and let six, eight, ten, twelve, or fifteen millions

* It is remarkable how closely this suggested line has been followed in
later days. Beginning at New York, the line would be by the Erie or New
York Central and Hudson River to Buffalo, the Lake Shore to Chicago, one of
the Chicago-Omaha lines to Omaha, and the Union Pacific and its Oregon
short line to Ogden and Portland. See map (i) at end of volume.

' The article concludes, " we shall examine this subject more in detail in
some future number."

3 The original files of the Emigrant^ or such of them as it has been possible
to find, are among the collections of the Washtenaw County Pioneer Associa-
tion, at Ann Arbor, Michigan.

GENESIS OF THE PACIFIC RAILWAY. 15

of dollars of the public money be appropriated to defray the
expense annually until it is finished.*"

Lewis Gay lord Clarke, in an article in the Knickerbocker
Magazine, in 1836, claimed the honor of having originated the
idea of a Pacific railway.

The claim of Lalburn W. Boggs, once governor of Missouri,
has been advanced by his son, W. N. Boggs, of California, who
has an article written by his father in 1843 ^^r the Saint Louis
Republican, but never published, in which the author urged the
building of a Pacific railway and presented an estimate of the
cost.'

In a speech delivered in Saint Louis in 1844, Thomas H.
Benton predicted that men full grown at that time would yet see
Asiatic commerce crossing the Rocky Mountains by rail.'

In Hunfs Merchants' Magazine for January, 1845 (Volume
XII., page 80), the editor, in discussing the commercial relations
between England and China, predicts, " Those persons are now

' Dr. Barlow's article may be found quoted in full in E. V. Smalley's
History of the Northern Pacific Railway, pages 52-56. The first paragraph is
as follows : " An able writer in the Emigrant, . . . . in a series of numbers
of which it has fallen to my lot to see only the first, is endeavoring^to draw the
attention of the public to the scheme of uniting New York and the mouth of
the Columbia River by railroad." But with reference to the priority of the two
articles in the Emigrant and Intelligencer, Mr. Smalley observes : " Evidently
the article was written as early as 1834 and perhaps in 1833, and the articles in
a Michigan paper to which it refers are supposed to have been called out by
others previously written by him." (History of Northern Pacific Railway, page
52). And later he adds : " Perhaps there were earlier advocates of a Pacific
railway than Dr. Barlow, but if so, the author of this volume has not been able
to identify them, and therefore accords to hipi the first place." In the face of
Dr. Barlow's own acknowledgment, however, it is difficult to find a justifica-
tion of Mr. Smalley's statement. To this unwarranted conclusion by Mr.
Smalley, attention was also called by General Granville M. Dodge in a valuable
paper on Transcontinental Railways, read by him before the Society of the
Army of the Tennessee at its twenty-first annual reunion at Toledo, Ohio,
September 15, 1888.

" Bancroft, History of California, Volume VII., page 500, note.
3 Ibid.

THE UNION PACIFIC RAILWAY.

living who will see a railroad connecting New York with the

Pacific, and a steam communication from Oregon to China.'"

In 1835, Rev. Samuel Parker, a missionary sent out by a
Presbyterian church in Ithaca, New York, to convert the Indians
in Oregon and on the Pacific coast, wrote in his journal after he
had crossed the Rocky Mountains : "There would be no difficulty
in the way of constructing a railroad from the Atlantic to the
Pacific Ocean, there is no greater difficulty in the whole distance
than has already been overcome in passing the Green Mountains
between Boston and Albany ; and probably the time may not be
far distant when tours will be made across the continent, as they
have been made to Niagara Falls to see Nature's wonders.'"

In 1838, the idea of a Pacific railway had ceased to be novel
and the execution of the project was freely suggested, predicted,
and urged in newspapers and magazines from that time.

The timidity with which the project of a Pacific railway was
suggested by the early writers may be pardoned when it is con-
sidered that the Stockton and Darlington railway had been open
only since 1S25, and the Liverpool and Manchester railway only
since 1829, that there was not a mile of railway in New England
until 1834, and that the Baltimore and Ohio was still considered
an experiment in 1840.'

In a memorial presented by Robert Mills to Congress in 1845,

'See also Volume XVII., page 385 (October, 1847), of the same maga-
lioe, where reference is made to the efforts of Whitney lo accomplish the object.

'Quoted in History of Northern Pacific Railway, E.V.Smalley, pages 43-44.

3 The following table shows the number of miles of railway built in the
United States in each year before 1S36 ;

...

.B3.

.8j,

-833

.834

■fes

W^ylind and D
VireinlB -
Sdulh CuDliiu.
Ohio - ■

strict Columbia

V'b

30.00

34-' J
41.04

^11

17.311

3l'6o
36.61

4.ao

9^™
..1.63

59.00

Total

W-Bo

na-TO

.10.08

■gBJ,,

137.3a

GENESIS OF THE PACIFIC RAILWAY. I?

in which the author asked Congress to appropriate money for
testing the qualities of an improved form of roadway, he claimed
to have " had the honor of being perhaps the first in the field to
propose to connect the Pacific with the Atlantic by a railway from
the head navigable waters of the noble rivers disemboguing into
each ocean " in a book published in 1819-. In his memorial, he
discouraged the use of railways as being expensive to build,
unable to ascend steep grades, and slow ; in place of them he
proposed the building of improved public roads, over which
" steam carriages*' as well as other vehicles might be propelled or
drawn. In his memorial he advocated the construction of such a
road from the mouth of the Platte River over the Rocky Mountains
near the source of the Missouri River and thence to the head of
navigation on the Columbia River. He can hardly be regarded as
the advocate of a Pacific railway,

Bancroft is authority for the statement that, in 1832, Hartwell
Carver, of Rochester, New York (grandson of Jonathan Carver,
the early explorer of the Northwest), published articles in the New
York Courier and Enquirer in favor of a transcontinental railway
with its western terminus on the Columbia River, and that he after-
wards memorialized Congress in behalf of such a project from
1835 to 1839. H^ ^s said to have asked Congress to grant him
and his associates a perpetual and exclusive charter for a railway
and telegraph from Lake Michigan to the S<Duth Pass and branches
to San Francisco and the Columbia River, with a sufficient land
grant and the privilege of purchasing eight millions of acres of
selected public lands at $1.25 per acre, to be paid for in stock of
the company as fast as the railway and telegraph should be com-
pleted ; the time of travel from New York to San Francisco was
estimated at five days, and the trains were to be provided with
sleeping cars sixteen feet long, and saloon and dining cars.' An
article on the subject by Carver is found published in the Courier
and Enquirer in 1837.

' See Bancroft's History of California, Volume VII., pages 498-499. This
claim appears to have been made later by Carver himself, and is doubtful of
verification. Smalley, in his History of the Northern Pacific, rejects it (page
52). The proceedings of Congress contain no record of the alleged memorials*.

1 8 THE UNION PACIFIC RAILWAY.

John Plumbe, of Dubuque, Iowa, advocated in a pamphlet in
1836, a railway from Lake Michigan to Oregon, and a meeting of
his townsmen was held in March, 1838, for the consideration of
his scheme. On the anniversary of that meeting, another meet-
ing, held in Dubuque in 1847, ^ind presided over by Plumbe him-
self, resolved " that this meeting regard John Plumbe, Esquire, our
fellow-townsman, as the original projector (about nine years ago)
of the great Oregon railroad."' In 1840, Plumbe is said to have
visited Washington with a memorial from the legislature of Wis-
consin, praying for an appropriation of alternate sections of public
land on each side of a prospective railway to be constructed by a
company composed of all who should desire to participate in the
work, with a capital of $100,000,000.00 divided into 200,000
shares of $500.00 each, payable in installments of twenty-five
cents as often as needed until the railway should be completed at
the rate of one hundred miles per annum ; this scheme is said to
have been defeated by the opposition of Southern representatives.'

The history of great and novel projects is much the same.
First is the timid suggester, expressing his ideas cautiously,
regarded by most people as hair-brained, and giving vent to his
innovations in articles in obscure publications ; next in line is the
zealous agitator, overstepping in his enthusiasm the bounds of
common sense, moving about among the people and advocating
ridiculous means of promoting the projects ; then last comes-
sometimes slow, but always sure — the great mass of humanity with
a consensus of opinion not far from the right and with the energy
to enforce it.

In this study of the Union Pacific Railway, the period of
invention or inception, exemplified in the writer in the Emigrant,
has been passed, and the period of agitation zxid ferment, exem-
plified in Asa Whitney, will properly follow in the next chapter.

' Bancroft, History of California, Volume VII., page 499.
* Ibid, pages 499-500.

CHAPTER 11.

ASA WHITNEY.

A NARRATIVE of the life of Asa Whitney from 1840 to 1850 is
the history of the development, during that period, of the Pacific
Railway project. The aim and object of his life was the build-
ing of a railway from Lake Michigan or the Mississippi River to
the Pacific Ocean, and he devoted his fortune and energies to
that aim and object with all the zeal and persistence of a fanatic.
He was a merchant in New York City, and had spent some years
in China, Japan and the East. In the second memorial pre-
sented by him to Congress in 1846, he says that while riding
on the Liverpool and Manchester Railroad in England, in 1830,
and observing the speed and facility with which its work was
done, he foresaw the great future of railways, and predicted the
important part they would perform in abbreviating the distance
between China and the markets of England. In 1842, while
on a voyage to China, his attention was more forcibly called to
the matter by information of the recent conclusion of a peace
with China, and the opportunity afforded by it for a more
extensive commerce* He spent about two years thej^fter in
China, during which time he accumulated much information
concerning the commerce of the East; and in 1844 he returned
to America fully impressed with the importance of constructing
a Pacific railway.

Whitney did not look upon his scheme purely and simply as

a business project, but crowned it with the halo of an enthusiastic's

fancy. In a pamphlet published by him in 1849, he describes

his attitude in the following words : " My desire and object have

been to carry out and accomplish this great work for the motives,

as here and everywhere else by me declared, to give my

20 THE UNION PACIFIC RAILWAY.

country this great thoroughfare for all nations without the cost
of one dollar; to give employment to and make comfortable
and happy millions who are now destitute and starving, and to
bring all the world together in free intercourse as one nation.
If it is feared that the remuneration will be disproportionate to
the extent and importance of the work, then I am ready to
relinquish any claim I may have for compensation, and let the
people give me anything or nothing, as they please. If they
will but allow me to be their instrument to accomplish this great
work, it is enough; I ask no more. I am willing to have my acts
scanned, but I feel that I ought not to be doubted when I say
that what I have done, and what I propose to do, is not for the
gain of wealth, or power, or influence, but for the great good
which I am persuaded it must produce to our whole country. I
have undertaken this mighty work because I know someone's
whole life must be sacrificed to it.**'

He first brought the project to the attention of Congress,
January 28, 1845, ^^ ^ memorial presented by him to the Senate
through Senator Dickinson, and to the House of Representatives
through Congressman Pratt. Whitney*s plan, as set out in this
memorial, was to build a railway from Lake Michigan to the
mouth of the Columbia River in Oregon, though he afterwards
modified his plan, when Wisconsin had become a state, so that
it should begin at Prairie du Chien and end at Puget's Sound ;
and he was even willing to modify it in later days, when Cali-
fornia had become a part of the United States, so that it should
begin at almost any point on the Mississippi and end at San
Diego, San Francisco, the mouth of the Columbia, or Puget*8
Sound, on the Pacific Coast." His plan for building the railway
was unique and visionary. He estimated that the railway would
cost $50,000,000.00, and that incidental expenses and expenses
of management till completion would amounc to $15,000,000.00.
The public domain was to be the source of the means needed for

'Quoted in Report of Committee on Roads and Canals, H. R. Reports, 1st
Session, 31st Congress, 140.

'See map (i) at end of volume.

ASA WHITNEY. 21

the work, and the railway, when completed, was to be Whitney's
private property, but practically free, though such tolls and fares
were to be charged as would be sufficient to pay the expenses of
maintenance and management. Whitney's idea of the ownership
of his railway was peculiar. He expected that for some years the
railway would not pay expenses, but was willing to undertake its
management until it should pay expenses, and then submit it to
the control of the general government ; if there should be any
surplus of earnings over expenses, he expected it to be devoted to
educational and other public purposes. "Your memorialist is
induced to pray," he concludes, " that your honorable body will
grant to himself, his heirs and assigns, such tract of land' the
proceeds of which to be strictly and faithfully applied to the build-
ing and completing the said railroad, always with such checks and
guarantees to your honorable body as shall secure a faithful
performance of all the obligations and duties of your memorialist,
and that, after the faithful completion of this great work, should
any lands remain unsold, any money due for lands, or any
balance of moneys received for lands sold, and which have not
been required for the building of this road, then all and every of
them shall belong to your memorialist his heirs and assigns
forever."

The weakest point in Whitney's scheme was the colonization
feature of it, by which he expected to make his land -grant pro-
duce the means of building the railway. "It is proposed," he
dreams, "to establish an entirely new system of settlement, on
which the hopes of success are based, and on which all depends.
The settler on the line of the road, would, as soon as his house or
cabin were up and a crop in, find employment to grade the road.
The next season, when his crop will have ripened, there would be a
market for it at his door by those in the same situation as himself
the season before. If any surplus, he would have the road at low
tolls to take it to fnarket ; and if he had in the first instance paid
for the land, the money would go back, directly or indirectly,

' A strip of land sixty miles wide, thirty miles on each side of the railway,
from Lake Michigan to the Pacific.

22 THE UNION PACIFIC RAILWAY.

for labor and materials for the work ; so that in one year the
settler would have his home, with settlement and civilization
surrounding, a demand for his labor, a market at his door for his
produce, a railroad to communicate with civilization and markets,
without having cost one dollar. And the settler who might not
have means in money to purchase land, his labor on the road
and a first crop would give him that means ; and he would in one
year have his home, with the same advantages, and equally inde-
pendent."

When Whitney's scheme was cast in the form of proposed leg-
islation, as in the bill favorably reported by the Committee on
Roads and Canals in the House of Representatives in March^
1850, the following were the principal provisions : Whitney was
to have the right of way of two hundred feet through the public
lands from any point he should select on Lake Michigan or the
Mississippi River to any point on the Pacific Ocean at which a
good harbor could be secured, and the railway was to be built as
nearly as possible in a straight line. A strip of public land sixty
miles in width (thirty miles on each side of the railway) was to be
withdrawn from sale and to be sold to Whitney for ten cents per
acre, and as fast as each section of ten miles of railway should be
completed, Whitney was to have power to contract for the sale of
the first strip of sixty miles by five miles (/.^., one half of the first
ten-mile strip of his grant) and the government was to issue pat-
ents to the purchasers ; but if the price at which Whitney should
sell the land should net an average of seventy-two cents per acre^
and should exceed the outlay for the construction of the ten miles
of railway, the excess was to be held by the government for appli-
cation on the construction of the railway where the lands should
prove to be less valuable. And whenever sums realized from the
sale of the first strips of five by sixty miles, together with any
accumulated excess, should prove insufficient to pay the expenses
of constructing the railway, enough of the seCond strips should
be sold in like manner to reimburse Whitney's actual outlay, and
this latter sale should be by public auction in lots of from forty
to one hundred and sixty acres, under the direction of a com-

ASA WHITNEY. 23

missioner of the government. The railway and all machinery and
other property connected with it should be forfeited by Whitney
if he should fail to complete his work. While the work should
be in progress, United States mails (but not foreign mails) should
be carried free of charge, while for private passengers and freight
only such tolls should be charged as were charged on the princi-
pal railways of the United States, to be established and regulated
by Congress. Upon the completion of the railway, all unsold
lands in the strips granted to Whitney were to be held by the gov-
ernment as a pledge for the operation of the railway for ten years,
or until such time as the tolls of the railway should pay its expen-
ses. "After said road shall be completed, the Congress of the
United States shall have power to establish and regulate its tolls
or charges for freight or passengers forever after, and it being
intended that this road shall be a free public highway, as far as
practicable, for the equal and common benefit of all the people
of the United States, the rates of said tolls shall be such as to
yield a reserve merely sufficient to keep said road in repair, and
to defray the necessary expenses of its operation, superintendence
and other charges, including the sum of four thousand dollars
per annum to be allowed said Whitney and his assigns for the
care and superintendence of said road." "All that part of the
route for said road which is not within a state, but territory of and
under the jurisdiction of the United States, the said road, its
machinery, and appurtenances, shall be exempt from taxation
forever ; and this exemption shall be continued on admitting any of
such territory to be a state of this Union." The interests of the
government were to be protected and represented by a commis-
sioner appointed by the President ; in case of disagreement
between Whitney and the commissioner, each was to select a com-
petent engineer whose decision should be final ; in case of a dis-
agreement between the engineers, they were to select a third engi-
neer whose decision should be finally final. Whitney was to be
permitted to cut timber and get stone, fuel and other materials
from any unsold government lands convenient to the railway.
Whitney and his assigns were to locate and survey at least two

24 THE UNION PACIFIC RAILWAY.

hundred miles of railway from the eastern terminus, and to com-
plete at least ten miles of the railway, within two years ; and the
entire route was to be located and surveyed, and one-third of the
railway completed, within nine years from the passage of the act ;
one other third should be made and completed within six years
thereafter ; and the entire railway should be completed and ready
for use within twenty-five years from the passage of the act.*

The first memorial was presented to Congress too late for any
action, and Congress adjourned without having considered Whit-
ney's scheme. Soon afterwards Whitney, with a party of seven
young men, went on an exploring expedition from Prairie du Chien
westward across the great bend of the Missouri and southward
and eastward down the Missouri to Saint Louis, where he arrived
September 20, 1845, more enthusiastic than ever in the prosecu-
tion of his project. He now began a systematic bombardment
of Congress directly and indirectly through every available means
of affecting public opinion. He conversed with every public man
that he could reach, and wrote letters to others out of reach,
sought the general public through published letters and newspa-
per articles, and spent much effort in Washington in personal inter-
course with everyone that would take an interest in his great pro-
ject. He prevailed on the learned and studious in magazine arti-
cles and pamphlets. Each session of Congress found his scheme
bobbing up in each House. He visited all the great cities in the
country from Boston to Saint Louis and Memphis and held pub-
lic meetings in them.

The nature of these public meetings is well shown by William
D. Kelley, in his description of a meeting held in Philadelphia,
on the 23d day of December, 1846 (found in an address
delivered in the Academy of Music, June 12, 1871, on the "New
Northwest" in the interest of the Northern Pacific Railway, and
published in the "Speeches, Addresses, and Letters on Industrial
and Financial Questions, by William D. Kelley, M.C.").

" The grandeur of the subject inspired me, and my enthusiasm
for the great project induced Mr. Whitney, despite the disparity

' House of Representatives Reports, 31st Congress, ist Session, 140.

ASA WHITNEY. 25

of our years, to favor me with frequent conferences, and to bring
to my attention whatever information relating to the subject he
obtained. Early in the year 1846, I felt justified, by the growth
of sentiment in its favor, in undertaking to secure him an oppor-
tunity to present his subject to a public meeting of the citizens of
Philadelphia.

"To induce a sufficient number of the citizens to act as officers
of the meeting was the work of time. I found but few who took
an interest in the subject, or believed in the feasibility of the pro-
ject. Some said that a railroad so far north would not be avail-
able for as many months in the year as the Pennsylvania canals
were ; that it would be buried in snow more than half the year.
Others cried, * What madness to talk of a railroad more than two
thousand miles long through that wilderness, when it was impos-
sible to build one over the Alleghanies !*

"As I went from man to man with invaluable collections of
facts and figures Mr. Whitney had gathered, I found that the
doubts with which the work must contend were infinite in num-
ber; and it was not until six months had elapsed that a sufficient
number of well-known citizens to constitute the officers of the
meeting had consented lo sign the call for a meeting and to
act as such.

"Yet the cause had gained adherents, and, as I find by
reference to the papers of that day, the meeting for which I had
so long labored was held in the Chinese Museum on the evening
of December 23, 1846.

"His Honor, John Swift, then mayor of the city, acted as
president ; Colonel James Page, Hons. Richard Vaux, William
M. Meridith, and John F. Belstering, together with Mr. David S.
Brown and Mr. Charles B. Trego, acted as vice-presidents ; and
Senator William A. Crabb and William D. Kelley, acted as secre-
taries. The speakers at the meeting were Messrs. Whitney,
Josiah Randall, Peter A. Brown, and William D. Kelley.

"Mr. Whitney stated with great clearness his project and the
advantages that would result from it. It was, he said, to be a
railroad from Lake Michigan to Oregon. He believed it would

26 THE UNION PACIFIC RAILWAY.

be constructed on a line about 2400 miles in length, and he and
his associates hoped to be able to build it in twenty years if the
government would grant sixty miles breadth of land for the
whole distance.

" In answer to the question how he could make land in that
remote wilderness available for building a road, he dwelt upon the
contrast between the climate of that country and that with which
dwellers east of the Mississippi were familiar, and asserted fear-
lessly that a railroad through that section would be less disturbed
by snow than one through central New York or Pennsylvania, and
proceeded to disclose his plan, which involved a large annual
emigration from Europe and the cities of the eastern states. His
plan was to employ these emigrants in the construction of the
road, and to pay them, in part, in land, and to detail a sufficient
number to prepare small portions of the farm of each for culti-
vation and occupation, so that they who worked upon the road
one year should dwell upon its borders as farmers thereafter. By
this method he believed that by the time the road should be
built the line of it should be tolerably well settled, and a large
local traffic created.

"Josiah Randall, Esq., submitted to the meeting a series of
resolutions which were heartily adopted, and from which I quote
the following :

"* Whereas, the completion of a railroad from Lake Michigan
to the Pacific would secure the carrying of the greater portion of
the commerce of the world to American enterprise, and open to it
the markets of Japan and the vast empire of China, of all India,
and of all of the islands of the Pacific and Indian Oceans,
together with those of the western coast of Mexico and South
America ;

"*And, whereas, we have in our public lands a fund suffi-
cient for and appropriate to the construction of so great and
beneficent a work ; and the proposition of Asa Whitney, Esq.,
of New York, to construct a railroad from Lake Michigan to the
Pacific for the grant of a strip of land sixty miles wide, offers a

ASA WHITNEY. 2/

feasible and cheap, if not the only, plan for the early completion
of an avenue from ocean to ocean ; therefore,

" * Resolved, that we cordially approve of the project of Asa
Whitney, Esq., for the construction of a railroad to the Pacific,
and respectfully petition Congress to grant or set apart, before
the close of the present session, the lands prayed for by Mr.
Whitney, for this purpose.' "

Of a meeting held in New York City, on the 4th day of
January, 1847, the Courier and Enquirer, ilitxi the principal news-
paper of that city, had to say : " The public meeting advertised
to be held in the Tabernacle last evening for the purpose of con-
sidering the expediency of commending to the consideration of
Congress the projected railroad to the Pacific, was turned into a
bear-garden tumult by a packed party of Agrarians, National
Reformers, Fourierites, etc., who seem to think that the public
lands of the United States have no other legitimate use or pur-
pose than to be distributed without money and without price
among the landless of the Universe, who may come here to
clutch a portion of the plunder."' With reference to the
same meeting, E. V. Smalley (in his History of the Northern
Pacific Railroad, page 59) adds : " Whitney had hardly begun
speaking when he was interrupted with calls for Shepherd, a
young lawyer then popular with the turbulent classes. Ryckman,
then a candidate of the National Reformers for some city office,
mounted the platform and began a harangue denouncing
Whitney's project, and claiming the public lands as the property
of the people, not to be given over to any set of speculators.

" There was a great uproar in the audience, and the mayor
and the vice-president prudently seized their hats and overcoats,
and escaped by a back door, Mr. Whitney presumably following
after. The mob had the hall to themselves for a time, until at
last the gas was turned off, amid the shoutings of an Irish agra-
rian orator named Comerford."

And William D. Kelley, on the same subject, says : "On the

'Quoted on page 59, E. V. Smalley's History of the Northern Pacific Rail-
road.

28 THE UNION PACIFIC RAILWAY.

4th of January, 1847, ^^ addressed an immense meeting in the
Tabernacle, New York, which was presided over by the mayor
and participated in by the leading men of that city. His remarks
were listened to, but at their close a mob took possession of the
hall and denounced the project as a swindle, declaring that it
was an attempt on the part of a band of conspirators to defraud
the people by inducing the government to make an immense
grant of land for an impracticable project."'

In May, 1845, iV/7^/ National Register^ was willing to con-
cede that Whitney's scheme was " seriously entertained by some
of the public journals;" and when he began his exploration, in
1845, of the country west of Prairie du Chien, the same journaP
denominated him "that prince of projectors." Senator Bell
testified of him in Congress when assailed by Benton, that he had
^* conversed with him (Whitney) and had found him modest and
intelligent." Even the London Times gave serious consideration
to his project, though without endorsing it. Whitney had visited
and memorialized nearly every state legislature in the country,
and had secured from them resolutions in support of his plan
that were later presented to Congress by the senators and repre-
sentatives of the several states ; and in 1850 he was able to boast
that his memorial to Congress was backed by the favorable resolu-
tions of Maine, New Hampshire, Vermont, Rhode Island, Con-
necticut, New York, New Jersey, Pennsylvania, Ohio, Michigan,
Maryland, Tennessee, Kentucky, and Indiana, as well as by
resolutions of public meetings at Jefferson (Indiana), Cincinnati,
Louisville, Terre Haute, Indianapolis, Dayton, Wheeling, and
Philadelphia.

But after all, Whitney's scheme was visionary and could not
be successful ; mature public opinion finally passed judgment
on it and rejected it, though it retained all that was good in it in
the plan that was finally carried into effect. What was really
accomplished by Whitney seems to have been fully appreciated

' Speeches, Addresses, and Letters, by William D. Kelley, M. C, page 458.
* Volume 68, No. 11.
3 Volume 68, No. 20.

ASA WHITNEY. 29

and expressed in the report of the Committee on Roads and
Canals of the House of Representatives in 1850 : " Mr. Whitney
has been unremittingly engaged at his own expense since 1841,
in collecting information on this subject, as well in Asia as in our
own country ; and we are indebted to him for the origination of
the project, for the maturity of the first plan, for the large
amount of practical information that is brought to bear on the
subject, and for awakening public attention to its importance.'"

In the 28th Congress, in January, 1845, Mr. Whitney's first
memorial was presented to both houses of Congress by Repre-
sentative Zadock Pratt, of Prattsville, New York, an enthusiastic
convert to Whitney's project, but no action was taken on it.'

In the 29th Congress, a second memorial was presented by
Whitney to Congress, and in the Senate was referred to the
Committee on Public Lands (Senator Breese, Chairman), from
whom a bill was reported in favor of Whitney's project on the
31st of July, 1846.3 In the House of Representatives, the Com-
mittee on Roads and Canals, to whom Whitney's memorial and
other communications of divers persons had been referred,
reported that " while the prudent and sober-minded would,
probably, be unwilling to see the revenues or the property of the
nation pledged or in any way committed to the construction of a

' House of Representatives Reports, 31st Congress, ist Session, Number 140.

"See " Zadock Pratt's Letter to the People of the United States," published
in the National Intelligencer and The Union, at Washington, and in Hunfs
Merchants^ Magazine for October, 1847 (Volume XVH., page 385). In the
American (Whig) Review for April, 1845 (Volume I., page 424) is an
exhaustive consideration of the memorial presented to Congress by Whitney.
The writer says : " We have no more of doubt but that Mr. Whitney's project
will be realized, than we have that steam is now amongst the great agents of
human power, or that Clinton's canals are now amongst the great highways of
our country. In fine, we have lived to hear street-corner wits amusing them-
selves on the folly of railroads ; but, though we cannot hope to enjoy such a
jaunt, many, we have no doubt, are the children now in life, who will pass on
railroads from the tide-margin of the Atlantic to the tide-margin of the
Pacific."

3 The Breese report is considered with approval in Muni's Merchants^
Magazine for November, 1846 (Volume XV., page 477).

30 THE UNION PACIFIC RAILWAY.

costly railroad, .... it is believed that they would cheerfully
assist to open an eligible avenue, if one could be assured at a
small cost compared to the object to be realized.'*

In the first session of the 30th Congress, on January 17, 1848,
Senator Felch presented Asa Whitney's third memorial to Con-
gress, and it was referred to the Committee on Public Lands ; on
the 26th of June, 1848, this committee reported a joint resolution
for a survey and exploration of one or more routes for a railroad
from the Mississippi below the Falls of St. Anthony to the Pacific
Ocean, under the direction of the Secretary of War. On the
next day (June 27, 1848) Senator Niles, having learned that
the Committee on Public Lands would not report a bill in favor
of the Whitney project, introduced a bill in favor of the grant of
land prayed for, and had it referred to a select committee of Sena-
tors Niles, Corwin, Lewis, Dix and Felch ; the bill was favorably
reported back to the Senate with amendments on the 7th of July,
1848. Senator Niles moved for the consideration of the bill, but
the motion was lost by a vote of 27 to 21, largely through the
"boisterous and unparliamentary" opposition of Senator Benton.
In the same session, a select committee in the House of Repre-
sentatives reported a bill similar to the Niles bill in the Senate,
but it was referred to the Committee of the Whole, and nothing
further was done.' In the second session of the 30th Congress,
January 29, 1849, Senator Niles succeeded in getting his bill up for

' See letter of Asa Whitney to Freeman Hunt, editor of Hunfs Merchants'
Magazine^ published in November, 1848, in Volume XIX. (page 527) of that
periodical. He asserts that " Should the bill be passed at the early part of the
coming session of Congress, the work may be carried out, though not without
great difficulties, much increased by the large amount of lands sold or taken up
during the present year. After another season it would be impossible. There-
fore with the failure of this bill must end forever all hope for the accomplish-
ment of this great work," on his plan. This letter also contains a review by
Whitney of the work of the first session of the 30th Congress, and a defense
against the violent and unjustifiable attack made by Benton on his project and
the motives of the projector. See also exhaustive review of the report
of this select committee of the House (Pollock, Chairman) in the Democratic
Revieiv for November, 1848, (Volume XXHI. page 405).

ASA WHITNEY. 3 ^

consideration, but before a vote was reached it became apparent
that the local interests of the senators would not permit the pas-
sage of the bill ; and on the 7th of February, 1849, Benton intro-
duced a rival bill for a "National Central Highway" from Saint
Louis to San Francisco, with a branch to Oregon west of the
Rocky Mountains. Benton's scheme was for the reservation of a
strip of land one mile in width from Saint Louis to San Francisco,
and one thousand feet wide for the Oregon branch, on which were
to be built railways and wagon roads to be paid for by the receipts
from the sales of public lands, seventy-five per cent being reserved
for that purpose from sales in California and Oregon, and fifty per
cent from all other sales of lands. The railway was to be leased
to such persons as should by contract with the government under-
take to carry persons and articles at reasonable rates, to be agreed
upon. In the same session Senator Houston introduced a bill
authorizing the Galveston and Red River Railroad Company to
construct and extend a railway to the coast of the Pacific Ocean
in California. Nothing beyond reference to committees was done
with these bills. It had become painfully plain that the local and
sectional question of the eastern terminus of the Pacific railway
would make it impossible to unite the majority of members of
either House of Congress on a single line of railway, and would
make any project on which a majority could be united too exten-
sive to receive the support of conservative statesmen. A resolution
introduced by Davis (Mississippi) late in the session for the survey
of routes from the Mississippi to the Pacific was not acted on,
but in the Army Appropriation bill at the end of the session
$50,000 was appropriated for that purpose ; the appropriation was
not used, however, and was allowed to lapse.

The year 1849 was the year of great railroad conventions, and
marks the high-water mark of Whitney's project. The agitation
of the conventions simply crystallized sectional and local interests,
while liberal bounty laws disposed of the public land on which the
success of Whitney's plan was based. In this year he published a
book in which was embodied, in a complete form, all his accumu-

32 THE UNION PACIFIC RAILWAY.

lated information on the subject of a Pacific railway and all the
details of his plan.'

In the 31st Congress (ist session) all the memorials, petitions
and bills presented in Congress were referred to the Committee
on Roads and Canals in each House, and each Committee made
an exhaustive report in favor of the grant (or sale on nominal
terms) of land to Asa Whitney for the construction of his railway.
But sectional feeling had become too strong to permit action on
either report. The two reports, however, received ample attention
from the country.'

* Project for a Railroad to the Pacific^ by Asa Whitney, of New York.
Printed by George W. Wood, Number 15 Spruce street. New York. See arti-
cle on "The Great Pacific Railroad" in the American (Whig) Review^ for July,
1849 (Volume X., page 6), which is really a favorable review of Whitney's book,
and concludes (of his plan) " its boldness, feasibility, simplicity, and economy
must commend it to universal favor." In the September number of the same
periodical (Volume X., page 311) is an extended comment on the recent meet-
ing of the New York Chamber of Commerce, in which a preference for Whit-
ney's plan over others had been expressed in a memorial to Congress ; the burden
of the article is that Whitney's plan is commendable as " keeping the railroad
out of politics," and that the feature of it which provides a possible profit for
the projector is not objectionable. In Ifunt^s Merchants' Magazine for July,
1849 (Volume XXI., page 72) is a long article by Senator Niles in favor of the
Whitney project; one in August, 1849 (Volume X., page 94) by William Derby,
(author of a " Universal Gazetteer'''') in the same vein ; and a third in December,
1849 (Volume X., page 616) by an "an officer of engineers " in vigorous support
of a line from Texas to the Gulf of Lower California through Mexico. The
route from the Gulf of Mexico to the junction of the Gila and Colorado rivers,
and thence to San Francisco is also advocated in the February (1850, Volume
XXII., page 146) number of the same magazine. That Whitney's project was
not a " party question " (at least in the north) at this time appears from the
hearty support given to it by the Democratic Review in September, 1849 (Vol-
ume XXV., page 243). The article particularly recommends the project as
avoiding " the great evils of extending the patronage of the Government — of
creating a gigantic debt, or of giving life to a corporation of dangerous magni-
tude."

*See Democratic Review for December, 1850, Volume XXVII., page 536,
and American (Whig) Review for November, 1850, Volume XII., page 539. In
DeBow''s Southern and Western Review for December, 1850 (Volume IX., page
601) is an ingenious argument for the Whitney project from a Southern
and slavery standpoint. "The South have generally favored Mr. Whitney's

ASA WHITNEY. 33

The growth of sectionalism appeared in a modified Whitney
bill reported in the 32d Congress on April i, 1852, by the
Senate Committee on Post-office and Post-roads, and providing
for the setting apart and sale to Whitney of a portion of the
public land to enable him to build a railway from the Mississippi
to the Pacific, not north of Memphis and San Francisco, and
reaching California by way of the Rio del Norte. This was the
end of the Whitney project of a Pacific railway.

Whitney's entire fortune is said to have been spent in the
attempt to realize his dream of a Pacific railway, and the "prince
of projectors " to have kept a dairy and sold milk in Washington
for a livelihood in his declining years.

The next ten years were to see the construction of a Pacific

scheme, but since the acquisition of California, and the increased

agitation of the slavery question, she has felt a strong desire to have the road
located as far south as possible Philanthropically and nation-
ally, there could be no hesitancy in our opinion ; and did peace and harmony
exist between the North and South, the latter we believe would, with one voice,
say Amen to Mr. Whitney's proposition. But as it is, the North continually
aggressing upon the South, we may justly hesitate before we enter into further
partnership concerns with partners whom we know to be opposed to us in every
feeling and interest." Though "the route proposed [by Whitney] is all on
what is termed free soil," and " the building of the road would greatly acceler-
ate the settlement of the entire line to the Pacific, [a result that would be] pre-
judicial to the South, by increasing a population hostile to our institutions," yet

" there is left no choice, except to decide between Mr. Whitney's^

plan and no road at all," for "there is no other route which can furnish an ade-
quate amount of land to induce Mr. Whitney to undertake the work," and "were

the work to be done by the Government, there would arise a

controversy for the location of the route that would more likely defeat all.'*
The Southern cities could connect with the Whitney road near Chicago by the
Mississippi Valley so as to "give to the South an advantage over the North.'*
As to the new population in the West, they " being agriculturists, and desiring
no protective legislation," their wants and their interests [would] be more directly

connected with the South than with the North and East, and

they would support and strengthen the South." "In case of

dissolution, the South would hold all the lands now on any Southern route ; and
if they could be made available for the means to build a railroad to the Pacific,
it would no doubt be done, so that we cannot see how Mr. Whitney's project
should be made to conflict with a Southern one or with S<iuthern intereftts."

34 THE UNION PACIFIC RAILWAY.

railway delayed and hindered by the reluctance of the Federal
government to extend aid (except by grants of land) to private
projectors, by the constitutional objection to the accomplishment
of the work by the government itself, and by the mutual jealousies
of the sections of the country contending for the eastern ter-
minus of the railway. These tendencies, it will be found, were
finally overcome only by the realization of the overwhelming
necessities of the country, and an appreciation of the part to be
performed by a Pacific railway in the preservation of the national
existence.

CHAPTER III.

SECTIONALISM AND LOCALISM.

No SOONER was a clearly-defined Pacific railway project in
existence than the particular interests of sections and localities
began to interfere with its practical accomplishment. When the
plan of Asa Whitney was first presented to the country, it was
regarded as a distinctly national scheme, and in his view the
matter of an international highway from Japan, China and
Eastern Asia to England and Western Europe was the most
important feature of it. Pacific coast territory of the United
States in 1845 was bounded on the south by the parallel of 42°
north (the southern boundary of the present state of Oregon) and
was claimed by the government to extend north to the parallel of
54° 40'. California, Nevada, Utah, Arizona, New Mexico, and
Texas, and portions of Colorado and Wyoming, were still a part
of the territory of Mexico, and a Pacific railway built in United
States territory would have had to be built along the northern
route (now followed substantially by the Northern Pacific Rail-
road) or the route by way of South Pass, suggested in the
Emigrant article (and now followed substantially by the Union
Pacific Railway and its Oregon Short Line), and as it was
regarded largely as an international highway, the natural connec-
tion would be with the Great Lakes or the system of east-and-
west railways terminating at the head of Lake Michigan. Thus
it is that, on the earliest* map presented by Asa Whitney in explan-
ation of his plan, the routes of the proposed railway are indicated
by almost straight lines from Saint Joseph, Michigan, to the
mouth of the Columbia River, one through the South Pass.'

When the scheme was first proposed, there was no rivalry for

* See Map (i) at end of volume.

• 35

36 THE UNION PACIFIC RAILWAY.

the western terminus ; indeed, the population of the Pacific coast
was not sufficient in numbers and strength to exert an appreciable
influence on the question of route, and the question of route and
western terminus became a question of expediency, within terri-
torial limits, under the control of the projector. This was like-
wise true of the eastern terminus, for a time, partly because in
the public mind the international highway feature of the railway
was exaggerated, and its local importance not fully appreciated.*
But in 1845, Texas was admitted to th* Union ; in 1846, the
" Oregon question " was settled by establishing the boundary of
the United States at the parallel of 49°^orth — 6° 40' (or four
hundred and fifty miles) south of the boundary claimed by the
government of the United States. In 1848, by the territory
ceded in the treaty of Guadaloupe Hidalgo, the Pacific coast line
was trebled in length, and the extent of the national territory was
increased towards the south so as to extend the coast line ironx
the parallel of 31° 28' north to that of 49° north. In (^847) ir*^^
gold was discovered in California, and in the three years follow-
ing, such a stream of population and property poured into the
territory, and such a vast amount of wealth was drawn from its
soil, that, in 1850, the territory became a state, and San Francisco
with its superior harbor became the principal commercial center
on the Pacific coast. The direct effect of this development on
the project of a Pacific railway was to make it inevitable that the
western terminus should be at San Francisco.' In the decade
from 1850 to i860, in which sectionalism and localism were
engaged in "drawing and quartering" the Pacific railway scheme,

* For an appreciation of the different light cast on the Pacific railway by
the development of the western states and territories, compare Whitney's and
Benton's ideas, as so often expressed, with the ideas of E. H. Derby, set out in
his article on "The Pacific Railway" in Hunfs Merchants' Magazine for
December, 1856 (Volume XXXV., page 659).

*See two interesting articles in Hunfs Merchants^ Magazine^ Volume
XVIII., pages 497 and 592, May and June, 1848, to the effect that Monterey or
San Francisco would be a better western terminus than Puget's Sound or the
Columbia River.

SECTIONALISM AND LOCALISM. 37

and at the East a score of large cities, a dozen states, and the two
great national sections were contending for the political and
industrial advantage of controlling the eastern terminus of the
great highway, the question of a western terminus was not raised.
Oregon had no territorial government until 1848, and had no
voice in Congress as a state until near the end of the decade, in
1859." San Francisco was assumed without contention to be the
proper western terminus, and if the interests of Oregon were con-
sidered, they were assumed and conceded to be fully served by a
branch line from the trunk of the system ; during the decade the
senators and representatives of California were occupied with the
almost hopeless task of harmonizing and balancing the contend-
ing interests of the North and South, and of the several states
and great cities east and south of the territories, while the nation
as a whole was fully convinced of the political and industrial
necessity of a closer connection between the Mississippi valley
and the Pacific coast than was afforded by the long and dusty
emigrant trail, " liberally strewn with the bleaching bones of draft-
animals and the wrecks of prairie-schooners."

The prime objection to the building or initiative control of
railways by a republican state, instead of by individuals, is that
local and sectional demands (political as well as industrial) will
cause the system built to be either too extensive or lacking in
continuity and proper correlation of members. A vote of a
legislative body representing an agglomeration of the contending
and opposing views of numerous sections, localities, and indus-
trial centers will always present a heterogeneous and irrational
scheme for a railway system. This is particularly the case in a
nation of such diversified and intensified interests as the United
States, while it is only less true in centralized and unified France,
England, and Belgium ; in Russia, where the Czar, when asked
by one of his ministers for directions as to the route of a pro-
' posed government railway, laconically indicated his desire by
placing a rule upon a map, drawing a pencil line along the edge
from one terminus to the other, and sayjng, "you can construct

38 THE UNION PACIFIC RAILWAY.

the line so,"* homogeneity and escape from "over-building*^
may be expected, but not in America, where every subject is a
sovereign, and every citizen a law-maker. This lesson is taught
by the building of the Union Pacific Railway, as that system was
planned, and, in one sense, built by the government — and that^
too, under the most favorable conditions, in many respects, for
government railway building under a republican form of govern-
ment.

The decade from 1850 to i860 was the " storm and stress "
period of the history of the Union Pacific Railway, and a review
of the course of events in Congress during that time will show
how the project was tossed about on the legislative sea by the
contending storms of local and sectional interests. But, before
entering upon a detailed review of the work in Congress, it may
be advisable to consider the separate contending interests and
their condition at the beginning of the decade.

(i) What might be called the Eastern interest was the strong-
est interest represented. The wealth and influence of Boston,
New York, Philadelphia and Baltimore were almost a unit upon
such a location of the Pacific Railway as would make them the
outlets of its business on the Atlantic sea-board. Whitney had
been a merchant in New York City, and his scheme had received
active support from prominent public men in New York^
Pennsylvania and Massachusetts. The earliest advocates of a
Pacific railway had contemplated its connection with the east
through the railways terminating at the head of Lake Michigan.
George Wilkes, of New York, in a memorial to Congress and else-
where, had strongly advocated a route due west from Chicago
to the South Pass and thence to Oregon, differing from Whitney's
only as to the form of management under which the railroad
should be built and operated ; according to his scheme, the land-

* This is related by D. Mackenzie Wallace, in his Russia (Volume I., pages
3 and 4) of the railway from Saint Petersburg to Moscow, four hundred miles
of track.

SECTIONALISM AND LOCALISM. 39

grant feature was to be discarded, and the government was to build
and own the railroad and operate it through commissioners
elected by the legislatures or the people of the United States.
In 1849 ^ Pacific railway convention had been held in Chicago,
in which Wilkes' plan had been indorsed in a letter from William
H. Seward. Dr. Hartley Carver, an adherent of the New York
interests, had published newspaper articles in favor of a Pacific
railway, and in January, 1849, was an applicant to Congress for a
charter under which to construct a railway from Lake Michigan
to San Francisco by way of the South Pass. In January, 1850,
Daniel Webster had called the attention of the Senate to the
enthusiasm of the people of Boston for the project. The com-
pletion of the Erie Canal, and the building of the Pennsylvania,
New York Central, New York and Erie, Baltimore and Ohio,
Michigan Southern and Michigan Central railways had given this
interest a strong prestige.

(2) The most persistent opponent of the Eastern interest was
the Saint Louis interest, represented by the indefatigable Thomas
H. Benton. His idea was that the natural point for the distribu-
tion of goods and persons transported from the west was at the
head of navigation on the Mississippi River. As early as Decem-
ber, 1846, on motion of Senator Semple, the Committee on
Roads and Canals of the Senate had been instructed to inquire
into the expediency of incorporating a company to construct a
railway from some point on the western border of the state of
Missouri to the mouth of the Columbia River. Later William
Bayard & Company, of New York, presented a memorial to
Congress, in which they asked for a grant of land to enable them
to build a railway from Saint Louis to California by way of the
Rio Grande and Gila River. In February, 1849, Benton himself had
introduced in the Senate a bill for a Pacific railway.' On March
20, 1850, in the discussion of one of Whitney's bills, he was openly
accused of being actuated by "sectional motives" in his per-
sistent opposition to the Whitney measure. A convention held
at Saint Louis on the i6th of October^ 1849, with delegates from

* Supra, page 31.

40 THE UNION PACIFIC RAILWAY.

several states, and presided over by Stephen A. Douglas, had con-
demned Whitney's scheme and presented a memorial to Congress
in favor of the Saint Louis interest. This convention had had a
stormy session. Benton, led by John C. Fremont, had advocated
a line from Saint Louis to cross the Rocky Mountains and Sierra
Nevada, between the 38th and 39th parallels, but had been
defeated by the wing of the convention, led by a lawyer named
Loughborough, in favor of the South Pass route ; the convention
had adjourned to meet in Philadelphia the following year.' The
Saint Louis interest also found some support in the plan of P. P.
F. Degrand, endorsed at a meeting of " friends of a railroad to San
Francisco," held in Boston in April, 1849 J t>y this plan a com-
pany chartered by Congress, after paying in $2,000,000.00,
should have a right of way (a strip of land, ten miles wide, on the
north side of the track) and a loan of not more than $98,000,000.00
in government bonds secured by mortgage on the road; the
route was to be from Saint Louis by the South Pass to San
Francisco.

(3) Memphis was supported by a strong party, with Arkansas

* The work of the Philadelphia convention, held in April, 1850, is instruc-
tive. Fourteen states, of which Virginia and Texas were the only Southern
states, were represented. A committee on resolutions, composed of one dele-
gate from each state represented, could agree on no resolution having reference
to routes or to means or manner of construction or control. The memorial to
Congress that represented the work accomplished by the convention empha-
sized " the fact, that the convention has avoided all reference to particular
plans The delegates believed that a rail-

road from the navigable waters of the valley of the Mississippi to those of the
national territor)' on the Pacific ocean, is practicable. That the expenditure
necessary to accomplish it is within the compass of national means ; . . . .

that the advantages, political, military, and commercial, to result

would be more than commensurate with the outlay required. They desire to

call the early and earnest attention of [Congress] to the subject

It was the general sentiment that the route of this great work

should be such as an impartial examination of the result of a full

and accurate survey of all the lines shall indicate as most

eligible, and that the plan under which it shall be prosecuted, should be such as
Congress, in its wisdom, may deem most advantageous." Conventions were as
much dominated by sectional and local motives as Co'ngress.

SECTIONALISM AND LOCALISM. 41

and Tennessee behind it. February 22, 1849, ^ call was made
for a general convention to be held on the 4th of July following,
at which were to be one hundred and twenty -five delegates from
South Carolina, one hundred from Georgia, and numbers from
other states. " The favorite project of these conventions (at
Saint Louis and Memphis) was a grand tru^jk line from Fort
Independence, with three branches to the Mississippi, one to
Saint Louis, one to Memphis, and one to Chicago."'

(4) Charleston was early in the field as a seeker of the benefits
of a terminus of the Pacific railway. The Mississippi party were
in favor of Charleston as a terminus. In October, 1845, Colonel
Gadsden, by whom the Mexican boundary was settled in behalf of
the United States, in 1853, and who was a member of one of the
aristocratic families that controlled the political and industrial
influences of South Carolina, urged upon the people of Charleston
the building of a railway to California on the route of the 32d
parallel. And in the next year a formidable movement was
begun by the people of Natchez to build a railway from Vidalia to
Alexandria in Louisiana, as the first link in a railway from Charles-
ton to Mazatlan in Mexico, on the Gulf of California. A modi-
fication of this scheme was promoted by Professor Forshey, who
made the eastern terminus Vicksburg instead of Natchez. Whit-
ney vigorously contested Forshey 's position in an article in
DeBow's Commercial Review^ in commenting on which the
editors of Niks' National Register^ agreed with Whitney that
" the route through the South Pass is the only one which can be
adopted with an equal regard to the interests of all parts of the
country."

(5) Texas not only had a scheme for a railway from Corpus
Christi or some other point on the Gulf of Mexico to San Francisco
by way of Paso del Norte,^ but was eager to be in the path of the

* Report of Committee on Roads and Canals, House of Representatives
Reports, 31st Congress, 1st Session, Number 140.

'October, 1847.

3 Volume 73, Number 8.

^Niles' National Register^ Volume 73, Number 21 (1848).

/ -

42 THE UNION PACIFIC RAILWAY.

railway and have a Gulf branch from the trunk line if a Missis-
sippi river terminus should be decided on. In January. 1849, ^^^
*' citizens of the State of Texas" petitioned Congress for a "right
of way " from the Rio Grande, on the western border of the state,
through the national territories to the Pacific on any line south of
36° 30' north latitude. In the next month (Februar)-, 1849)
Senator Houston introduced a bill authorizing the Galveston and
Red River Railway Company to construct a railway to the Pacific
Ocean in California.

Behind and beyond the separate sectional and local interests
that were cr}-stallized in the forms described, were the great politi-
cal and industrial divisions of the North and South. The South
had not been slow to appreciate the advantages of railways. The
first railway in the country had been built and operated in South
Carolina. At the time when the Pacific railway project was first
brought to the attention of Congress (in 1845) ^^^ United States,,
under the influence of Southern statesmen, were annexing Texas
and giving to the South the means of extending slave territory
and maintaining the equilibrium of slave states and free states in
the Senate. The historians are undoubtedly justified in conclud-
ing that the Missouri Compromise opened the eyes of the South-
em leaders to the necessity of acquiring more territory in a sec-
tion having an industrial soil in which the institution of slavery
might be expected to take root. Oregon and the northern part
of the Louisiana Purchase and the Northwest Territorv were
unsuited to the purpose. Slavery is essentially extensive and not
intensive : the North had thus developed in the line*of manufac-
tures and small farming, while the South had been given over to
large plantations. Hemmed in on three sides by the Northern
States, the Atlantic Ocean and the Gulf of Mexico, the further
increase of slave territory and slave states had to be to the west
and southwest. "It was precisely the struggle o\'er the Missouri
question which paved the way, in the South, for the recognition
of the fact that it would have to break through the southwest
boundan-. drai^Ti bv the Florida treatv, if it would maintain as

SECTIONALISM AND LOCALISM. 43

Strong a representation in the Senate as the North."* After the
acquisition of the territory, the next step was to bind it more closely
by the industrial bonds of railways. The Pacific railway was reas-
onably expected to have a great influence on the growth and devel-
opment of the parts of the country through which it passed ; and
the South, having already observed the superior wealth-producing
power of free labor, as compared with slave labor, and having seen
the population and wealth of the great cities of the North doubled
and the fertility of its farms increased by free labor, while the plan-
tations of the South were " worked out " by slave labor, was anxious
positively for the stimulus of the immense trans-continental traffic
expected, and negatively, unwilling that the overbalance of the
North should be increased by it. Suffice it to say, that in 1850, at
the beginning of the decade of " storm and stress" in Pacific rail-
way history, the effort to make California a slave state or to divide
it into two states, a free and a slave state, was a failure. The South
was ready to urge the repeal of the Missouri Compromise and the
North was ready to yield to it. The decade, from a political stand-
point, was to be given to a contest of freedom and slavery, in the
territories — the part of the nation to which a Pacific railway was to
give its greatest impetus — and at the end of the decade, the contest
was to be transferred from the halls of Congress to the battle fields
of the Rebellion. In 1850, the interests of the South as a section
had already become concentrated ; the interests were Tather local
than sectional. But from 1850 to i860, the history of the Pacific
railway can hardly be understood or appreciated without bearing
in mind the acute interest that the South had in the route and
eastern termini of the Pacific railway.

These concrete interests have been dwelt upon at some length
because it is .only by holding them constantly in mind that the
development (or more properly, perhaps, the failure of develop-
ment) of the Pacific railway project from 1850 to i860 can be made
intelligible or instructive.

* Von Hoist, Constitutional History of the United States, Volume II., page 551.

\ 44 THE UNION PACIFIC RAILWAY.

In the second session of the 32d Congress (i 851- 1853) ^^e
Senate gave more time and attention to the subject of a Pacific
railway than to any other subject. A bill " for the protection of
the emigrant route and a telegraphic line, and for an overland mail
between the Missouri River and the settlements in California
and Oregon," reported by the Committee on Territories in the
preceding session of Congress, was made a special order and
taken up January 13, 1853; thereupon a bill introduced by
Senator Gwin, of California, was substituted for it, the latter
being " to authorize the construction of a railroad and branches,
for establishing a certain postal communication between the
shores of the Pacffic and the Atlantic within the United States,
for the protection and facilities of travel and commerce, 'and for
the necessary defences of the country."

This bill provided for a trunk line from San Francisco through
^* Walker's Pass " and Albuquerque and along the Red River to
Fulton in the southwest corner of Arkansas. From this trunk
line a Saint Louis branch was to be extended to Independence,
Missouri, from a point south of Santa F^. From the Saint
Louis branch a Dubuque branch for connection with Chicago
and the Lakes was to be extended from the point where it crossed
the Arkansas River. From Fulton branches were to be built
to Memphis and New Orleans, and to make connection for
Charleston. A Texas branch was to extend from the source of
the Red River through Austin to Matagorda. An Oregon branch
was planned from a point in California to Puget's Sound. The
length of the trunk and branches was estimated at 51 15 miles.'
Through the territories the road was to be built by contractors
designated by the President, and they were to enjoy the road for
such time as should be specified in their contracts, and then
surrender it to the government ; through the states, the states
themselves were to have the control of the construction. To
provide means for the work, the contractors in the territories

' See map (i) at end of volume.

SECTIONALISM AND LOCALISM. 45

and the state of California were to receive alternate sections (odd
numbers) for twenty miles on each side of the road.' If any
state should not accept its grant of land and undertake the con-
struction of the part of the road within its borders before the
expiration of one year, the general government, through the
President, with the consent of the state, should undertake the
work in like manner as in the territories.

The first trouble with this bill was that the system contem-
plated by it was toojextensive, and the bill had been framed to
satisfy sectional and local demands. A slight consideration of
the provisions of the bill will show that every one of the five
great local interests had been consulted and fairly satisfied. But
the mark had been overshot. Not only was the contemplated
system too extensive, but the " state rights " spirit had been
aroused by the effort to ^e the Federal government control
over improvements within the " sovereign states." The ghost of
the Cumberland Road stalked in the Senate. The constitutional
question united with the practical question to " kill " the bill.
Lewis Cass voiced the general sentiment when he said in the
Senate, " No man estimates the value of this road higher than
I do, and within the constitutional powers of this government all
our efforts should be devoted to its construction. But ....
it is ... . apparent now and will yet be more apparent
from day to day, that there is danger of frittering away our (
strength on mere local questions as to the terminations of the )
road. With respect to the general idea of a railroad to the Pacific, .
I am in favor of it, and I shall vote for it most cheerfully ; but :
I think I cannot vote for this bill as it is. It is entirely too mag-
nificent for me. I want a road and for the present I want one *
road, and only one road, for one is all we can get now.'" That
fully describes the situation : the road was generally regarded as
a necessity ; the means of building it were by the majority of the

' The bill was afterwards made to provide that to Texas, in lieu of land,
should be paid the sum of $12,000.00 for each mile of the railway built within its
borders. Congressional Globe, 32d Congress, 2d Session, page 516.

» Ibidem, 32d Congress, page 285.

46 THE UNION PACIFIC RAILWAY.

dominant political party regarded as unconstitutional ; localism
was its practical weakness ; the effort to satisfy local interests had
made it too extensive ; it was too " magnificent."

The bill was read section by section in Committee of the
Whole, so as to permit amendments to be offered. The first
amendment offered (by Adams) provided for striking out the
provision for branches, to be followed, as promised by the mover,
by an elimination of the provisions for a definite and settled
route ; Chase made matters worse by suggesting that the amend-
ment simply change the Eastern terminus from Fulton to some
point " on the Missouri River, not below Independence, nor above
Kanesville " (Council Bluffs). The amendment received only
seven votes and was rejected, the contest over the routes of the
railway and location of its terminus was resumed by the formal
offering of the amendment already suggested by Chase, that the
railway be " from San Francisco in California, by the most direct
and feasible route, to some point on the Missouri River, not below
Independence in Missouri, nor above Kanesville (Council Bluffs)
in Iowa."' Saint Louis and the Eastern party were fairly content
with this proposition, but it was naturally unsatisfactory to Mem-
phis and the Southern parties, as shown by the amendment
offered by Bell (Tennessee) : "That with the view of securing the
speedy construction of a railroad and branches connecting the
Mississippi River with the Pacific coast, at suitable points, the
President of the United States is hereby authorized, with the
lights afforded by the several official explorations and reconnois-
sances, and others which have been heretofore made, and with
the aid of any such further examinations and surveys of particular
mountain passes or sections of country, supposed to present
obstructions of a serious nature, as he may think proper to be
made hereafter, to designate the terminus and general directipn
of the route of a railroad to connect the valley of the Missouri
with the state and territory of the United States on the Pacific
coast, keeping in view, in making such designation, economy in
cost and distance, easy grades, and at the same time the greatest

' See Map (i) at end of volume.

SECTIONALISM AND LOCALISM. 47

facilities for branch roads on or connections with Lake Michigan^
with Saint Louis, with Memphis, with New Orleans, with Mata-
gorda, and with some safe and commodious harbor on the coast
of Oregon."' Senator Bell frankly admitted that his reason for
submitting such an amendment was to satisfy the whole country,
though he knew that the choice of the President would necessarily
be in favor of the Memphis route.'* His words on the amendment
are prophetic : " I trust .... that we shall try the question
whether we are to have one road or two, because I think I foresee
that, unless we do something of this kind, we shall at this Con-
gress do nothing. By and by we shall be forced by dire necessity,
by the condition of the country, in the midst of difficulties, to
construct a road, wherever it may be, north or south." '

On the ist day of February, 1853, the bill "for the protection
of the emigrant route, and a telegraphic line, and for an over-
land mail between the Missouri River and the settlements in
California and Oregon,"^ having been referred to a Select Com-
mittee and reported back with a proposed amendment, was substi-
tuted for the bill under discussion as the special order. The
amendment proposed by the Select Committee was the substitu-
tion of a bill (the RuSk bill) differing from the Gwin bill in pro-
viding that the President, after having ascertained by the aid of
the army and civil engineers the most practicable route, should
designate the route and terminus of the railway, and should con-
tract for the construction of it by contractors who should consti-
tute a corporation under the name of "The Pacific Railroad and
Telegraph Company." The land grant was to be increased to

* The italicised word " Missouri " was afterwards changed by Senator Bell,
the author of the amendment, to " Mississippi^^ for the obvious reason that the
restriction of the Eastern terminus to the Missouri River would militate against
Memphis. The italicised words " with Lake Michigan^ with Saint Louis^ with
Memphis^ with New Orleans^ with Matagorda^'' were replaced, upon an applica-
tion of Adams (Miss.) to have Vicksburg added to the list, by the words ''7vith
the Atlantic and Gulf Railroads ^ now completed^ or in progress, or projected.^''

* Congressional Globe, 32d Congress, 2d Session, page 341.
•^ Ibidem.

* Supra, page 44.

48 THE UNION PACIFIC RAILWAY.

alternate sections (odd numbers) on each side of the railway for
six miles in the states and twelve miles in the territories. Twenty
millions of dollars in United States bonds, bearing interest at five
per cent, and maturing in fifty years, were to be issued in aid of
the construction of the railway, and pro rata payments of the whole
sum were to be made to the corporation of contractors upon the
completion of each section of fifty miles of the road. The pro-
visions of the act proposed to be substituted were to have no force
or effect within the states without the consent of their legislatures.
There was no provision for branch lines except that Congress
might authorize individuals, companies or states to form connec-
tions between it and any other road ; and the trunk lines and tele-
graph were to connect the valley of the Mississippi with the Paci-
fic Ocean. The company were to afford all railway and telegraph
facilities to the government free of charge, and the government
was to have the right to require the surrender of the property and
appurtenances after thirty years from its completion, upon the
payment of the actual cost of it, with interest at ten per cent., less
the amount of bonds advanced to it. Th,e provisions of this bill
were intended to meet all the objections that had been proposed
to the former measures. Those conservative Senators like Davis,
Brodhead, and Borland, who had complained that sufficient scien-
tific information of the extreme West was not at hand for the estab-
lishment of the route and the terminus of the railway, would find
in the bill a provision for preliminary surveys. Sectional and local
interests were expected to be obviated by having the selection of
the route and terminus in the hands of the "representative of
the whole people." The Democratic disbelievers in government
initiative in internal improvements were to be satisfied with the
creation of a corporation for the building, owning and operating
of the railway.^ Statesmen like Bradbury (Maine) who had inveighed
against devoting to a western railway a portion of the public
domain greater than all New England, could not with good grace
complain of the decreased grant of six and twelve sections per
mile. Far-sighted Senators like Brooke and Hale, who had early
foreseen that the public domain could not be relied on for the

SECTIONALISM AND LOCALISM. 49

construction of the railway, and that soon or late the national
government would have to put its own money into the project,
could find in the grant of twenty millions some reasonable expec-
.tation of success. State-rights Democrats could not urge against
this bill the constitutional objection that the federal government
could not construct internal improvements within the limits of the
** sovereign states" without their consent. But the more the
amendment was discussed, the more it became apparent that the
sectional and local interests involved would not permit the final
passage of a Pacific railway bill, at that session of Congress. The
interests in the central and northern part of the country might
have been made almost unanimous if it had not been for the
opposition of the extreme northern Democrats like Lewis Cass,
who insisted they would never vote for a bill that gave the Presi-
dent such extensive powers, or permitted the expenditure of the
money of the nation in furtherance of internal improvements
within the states. Some extreme state-rights Senators from the
South, like Mason of Virginia, openly declared they would never
vote for a Pacific railway bill, as a project with which the national
government had no concern. And Southern Senators in favor of
the road would not vote for its location by a Northern President,
even if he were a Democrat ; besides, as was to be expected, Whigs
and Democrats, as political parties, each wished the other to assume
the responsibility of the practical carrying out of the project.
A failure of such an undertaking and a great waste of public land
or money, or the creation of an overtowering autocratic corpora-
tion, or the location of the route so as to unduly favor a particu-
lar section or locality, would be certain to redound to the serious
injury of the party upon whom the responsibility could be placed.
The memory of the Cumberland Road and the Bank of the United
States "made cowards of them all." For that reason, the resis-
tance of the Democrats to the imposition of such duties on the
President was fully justified as a matter of practical politics.
Franklin Pierce, by trying — however conscientiously — to execute
the law, might have compassed the complete destruction of his
party. When the Pacific Railway finally came to be built, by the

50 THE UNION PACIFIC RAILWAY.

aid of the government, it was at a time when the project was more
or less justly identified with the great effort to preserve the national
life, the people had unfortunately become accustomed to the expen-
diture and waste of vast sums of money in national enterprises,
and what had threatened in 1853 to become the most important
sectional and partisan measure in American politics, was in 1862
and 1864 only a minor and subsidiary question of politics, con-
cealed and hidden by the overshadowing question of national life
or death. The Cumberland Road and the Bank of the United
States had made and unmade political parties for thirty years,
but the Pacific Railway and the National Banks of 1862 and 1864
were comparatively unimportant matters; the mountains had
dwindled into comparative mole-hills beside so much greater
mountains.

Matters were even more complicated by a "corporation"
amendment offered by Senator Brooke (Mississippi), which he
moved to be substituted for the Gwin bill after the enacting clause,
providing for the issuance of United States bonds in the sum of
$30,000,000, to run thirty years, in aid of the construction of a rail-
way from the Mississippi River to San Francisco, by " the Atlantic
and Pacific Railroad Company," a corporation to be organized
under the laws of any state. If the company could not get the
consent of California, Iowa, Missouri, or Texas to build the road
through either of those states, then the road was to terminate at
the eastern or southeastern boundary of California on the west,
and at the northern boundary of Texas, or western boundary of
Iowa, Missouri or Arkansas on the east, in the discretion of the com-
pany. When the company should have finished and equipped fifty
miles of the road, it was to receive $750,000.00 in money or in the
bonds issued in its aid ; and for each succeeding section of fifty
miles, until five hundred miles had been constructed and equipped,
it was to receive a like sum ; and thereafter, for each five hundred
miles until the road should be finally completed, the company
was to receive $1,500,000.00. The sum thus paid to the company
was to be repaid to the government, with interest, at any time
during the thirty years ; the mails were to be carried free of charge,

SECTIONALISM AND LOCALISM. 5^

but all other services performed for the government should be
charged for at the rate charged to individuals ; the government
retained the right to become the owner of the property at any
time after the expiration of twenty years from its completion,
upon payment to the company of the actual cost of it (less the
amount due from the company to the government). No land was
granted to the company except enough for the right of way and
other necessary purposes of construction and operation.

But it was plain that public opinion in 1853 demanded some
action on the subject of a Pacific railway, and many Senators grad-
ually went over to the small wing of the Senate which had insisted
that a properly conservative view of the subject justified Con-
gress in going no further at that session than to provide for such,
surveys of the western country, between the Missouri River and the
Pacific Ocean, as might be of future assistance in determining the
natural and best route and terminus, whether finally determined
by Congress or otherwise. Such an amendment had been offered
by Brodhead ( Pennsylvania ) to the bill (commonly called the
Rusk bill and reported by the Select Committee) proposed as
a substitute for the Gwin bill, but the amendment was rejected on
the 1 8th of February, 1853, t>y a vote of 22 to 34.

A crisis was reached on the following day (February 19, 1853)
when Shields (Illinois) offered an amendment providing ....
"That no portion of the $20,000,000.00 to be advanced by the
United States, shall be expended in; or deemed to apply to,
a road within the limits of any existing state of the Union ; and
so much of said road, if any, as shall be located within any state of
this Union, shall be made under the authority thereof, to be derived
from the state legislature, and not otherwise." This was held up
as the embodiment of good Democratic doctrine, and the party
lash was applied to such good purpose and with such good effect
that the amendment was adopted by a vote of 22 to 20, the only
Democrats voting against the amendment being from the states of
the Mississippi valley and directly interested in the routes not
south of Memphis. Thereupon Rusk and Gwin dramatically pro- 1
claimed that their bill was ** disjointed," " destroyed," and " dead," \

52 THE UNION PACIFIC RAILWAY.

and announced their intention of deserting the dismembered
corpse of their bill without tarrying to give it decent burial.
On the Monday (February 21, 1853) following the adoption of the
amendment and the "death" of the bill, there was a general
desire to prove that as a matter of truth, the bill was not "dead" —
but still lived, and was made even stronger by the amendment.
The Senators that considered the bill really " dead " hastened to
lay the responsibility of the murder on other shoulders, and as the
result of the efforts to shift the responsibility, the vote on the
amendment was then rejected. Miller, (California), and the two
Missouri Senators changing their votes. Yet a new amendment,
having practically the effect to limit the applicaH;ion of the
$20,000,000.00 to the construction of railway exclusively in the
territories, was proposed by Weller (California) and adopted. Then
the friends (or mourners) of the bill discovered after all they were
right when they had taken the bill for " dead," and that on this
last day they had mistaken galvanic twitches for evidences of vital
activity. The adoption of the amendment restricting the appli-
cation of the bonus to construction in the territories had made it
practically impossible for the road to be built on the line through
Texas and Arkansas followed in the original Gwin bill ; the con-
tractors would get no bonus for such portion of their work as
passed through Texas, California, or Arkansas. The eastern ter-
minus would have to be Independence, Saint Louis, Saint Joseph,
or Council Bluffs; thus the opposition of the Texas, Memphis,
Mississippi, Charleston, and New Orleans parties was again aroused,
and the Senate proceeded with its wake over the corpse of the Paci-
fic railway bill. Seward comforted and cheered the mourners by
moving an amendment for the payment of $600.00 per mile per
annum for carrying the mails on the portions of the line within
the states, but the rest of the time was consumed by the Senators
in "explaining their positions," and nothing more was heard of
the Rusk bill aft^r the adjournment of the Senate on the 2 2d of
February.

On the following day, when the Army Appropriation Bill
was taken up by the Senate, an amendment offered by Gwin

SECTIONALISM AND LOCALISM. 53

(being identical with the Brodhead amendment') was adopted
by the Senate and afterwards concurred in by the House of Repre-
sentatives on the I St day of March, 1853. The Army Appropria-
tion Bill was approved by the President on the last day of the
session, and the sum total of the Pacific railway legislation of the
32d Congress was the provision in it added by the Gwin (or Brod-
head) amendment, as follows :

" And be it further enacted, that the Secretary of War be, and
he is hereby, authorized, under the direction of the President of
the United States, to employ such portion of the corps of Topo-
graphical Engineers and such other persons as he may deem
necessary, to make such explorations and surveys as he may deem
advisable, to ascertain the most practicable and economical route
for a railroad from the Mississippi River to the Pacific Ocean, and
that the sum of $150,000.00 or so much thereof as may be neces-
sary, be, and the same is hereby, appropriated out of any money
in the treasury not otherwise appropriated, to defray the expense
of such explorations and surveys.

" That the engineers and other persons employed in said
explorations and surveys shall be organized in as many district
corps as there are routes to be surveyed, and their several reports
shall be laid before Congress on or before the first Monday in
February, 1854."

III.

In his annual message to Congress (first session of 33d \
Congress) in 1853, President Pierce referred to the Pacific railway
project to the extent of a column in the Congressional Globe,
but without saying much except by way of general recommenda-
tion of the subject to the early consideration of Congress. It
is true the President made an effort to lay down some good
Democratic doctrine in his message, but he qualified it with a
fairly clear intimation that a strict construction of the Constitu-
tion, or the proper maintenance and protection of state rights, was
not incompatible with donations of land or money, or both, by the

'Supra, page 51.

54 THE UNION PACIFIC RAILWAY.

government to aid in the construction of a Pacific railroad, on
the ground of its power " to establish post-offices and post-
roads," and " to provide for the common defence and general
welfare of the United States."

In the Senate a Select Committee of nine members was
appointed , with Gwin as chairman, for the consideration of all
bills, propositions and communications concerning a Pacific rail-
way ; this committee reported a bill in preparing which they had,
according to Gwin, " endeavored carefully to exclude everything
that might give rise to eonstitutional doubt or objection or tend in
any manner to create local or sectional prejudices," and had
framed a bill that "established no eastern terminus," and "gave no
preference to any state in the great valley of the Mississippi — no
advantage to any particular locality, except that given by nature
herself." But nothing was done with this bill in the first ses-
sion, and nothing serious was evidently intended by Gwin, beyond
satisfying his constituents. The explorations and surveys under
the supervision of the Secretary of War, according to the provi-
sions of the Army Appropriation Act, passed at the preceding
Congress, were in progress, and there was a general disposition
to -allow the whole matter to rest until they should be completed.

The course of matters in the House of Representatives during^
the session was much the same as in the Senate ; a Select Com-
mittee of thirteen members was appointed for the control of
Pacific railway matters, and reported a bill, under the influence
of McDougall of California, for the construction by the govern-
ment of two railways, one to be not north of 37° north latitude,
and the other from Lake Superior or the Mississippi River in
Minnesota to the Pacific Ocean. Such a bill could not have
become a law, even if seriously urged by McDougall ; nothing
was done with the bill, except to arouse bitter opposition to it
from the members representing Indiana, Michigan, Ohio, and
New York, and the other states interested in the Eastern party.

By this time, some change had taken place in the attitude of
the several parties. The influence of the Mississippi River and
the Allegheny Mountains on the problem must be understood in

SECTIONALISxM AND LOCALISM. 55

order to get any benefit from a review of the events in Congress
during the last half of the sixth decade. It was assumed by many
people that when the Pacific coast products reached the Missis-
sippi River they would leave the railways and follow the river,
unless they should reach it above the head of all-the-year naviga-
tion, generally considered to be at Saint Louis. Up to 1855, it
would have been difficult for members in either House of Con-
gress to understand how commerce would come to disregard the
great rivers, and bridge and cross them instead of following them
(except as to a few lines of products). In the second session of
the 32d Congress, Senator Underwood was an enthusiastic advo-
cate of the mouth of the Ohio (Cairo) as the eastern terminus of
the Pacific railway, and it was not entirely because he had the
interests of his own state of Kentucky at heart. He argued that
that point was the natural point of distribution for Pacific coast
products and the natural point of accumulation of eastern pro-
ducts, destined for Pacific coast and Asiatic markets. " There is
a point lower down the river [than Saint Louis] where the^
terminus should be. Nature has made the point. I suggested it
a week or two ago, but I am afraid it will not be carried, because
there is no influence in behalf of that point here. It will sink
below zero in consequence of Saint Louis on the one side and
Memphis on 'the other. But why is that the point in a com-
mercial attitude ? It is because when you bring this commerce
from the Pacific you can thence distribute it by water, you can
go down the Mississippi River, or if the Missouri be open, you can
ascend it by steamboats, which is a cheaper mode of transporta-
tion than railroads. You can ascend the Ohio to Pittsburg. You
can branch away and reach Paducah, and go up the Tennessee to
the falls, twelve miles, and reach Florence. You can go up the
Cumberland River to Cumberland, passing Nashville, and when at
a little distance above, at Shawneetown, you can turn to the left
and go to Terre Haute by ascending the Wabash- There is no
such concentration of waters on the face of the world as at that
point. In the making of a railroad for commercial purposes,
you ought to regard the point from which you can distribute this

56 THE UNION PACIFIC RAILWAY.

important trade and commerce with the greatest facility, with the
greatest cheapness, over the whole valley of the Mississippi ; and
that point is at the head of perpetual navigation upon the Missis-
sippi River, which is at or near the mouth of the Ohio ; because
from the concentration of waters there you may have the Gulf
trade in Gulf streams from that point all the year."' And he
was not answered as the merchant or railway manager of the
present decade would have answered him, to the effect that the
natural path of commerce would be east and west in spite of
rivers, lakes, and mountains, and that the magnetic poles of
commerce would be shifted by the truly wonderful magnetic
commercial currents of railway transportation from the North
and South to the East and West, that the railways would climb
over the mountains or tunnel through them, but not go around
them, and that they would bridge over and ferry across rivers and
lakes, but not yield up their burdens of wealth to be carried by
them ; on the contrary, Underwood's argument was met by a
denial of his premises, and not by a denial of the conclusions that
he drew from them. Senator Borland's words in reply were : "So
far from attacking the argument made by the Senator from Ken-
tucky (Underwood) the other day, I shall, without attempting a
new one, adopt his argument in support of my own views, but
starting upon another state of facts. I shall adopt his course of
argument precisely, for to my mind it was conclusive ; but I shall
start from different premises, and from what I think are the
well ascertained and established facts of the case."' But the great
extension of east and west lines from Boston, New York, Phila-
delphia, and Baltimore to Prairie du Chien, Dubuque, Burlington,
Hannibal, Saint Louis, Memphis, and Vicksburg in the first half

' Congressional Globe, Volume 26 (32d Congress, 2d Session), page 355.
There are some geographical inaccuracies in this quotation, that Senator
Underwood saw fit to correct a few days after the remarks were made. The
correction is found in Congressional Globey Volume 26, page 421. As the idea
and point made by the speaker are perfectly plain, the correction of the
geographical inaccuracies will not be attempted here.

'^ Ibidem, page 421.

SECTIONALISM AND LOCALISM. 57

of the decade, had brought the keener commercial mind of the
Eastern party to a partial realization of the fact that even if the
Pacific railway should terminate at Saint Louis, the great mass of
its freight would not be transferred to Mississippi River steamboats,
but would, of its own accord and by its own inclinations, follow
the lines of east and west railways terminating on the North
Atlantic seaboard, and the east and west water route by the Great
Lakes and Erie Canal to New York. Thus it became possible for
the Eastern party to support the Saint Louis terminus. It was
supposed for a time that freight from the Pacific coast was restricted
by the barrier of the Alleghenies to two outlets from the upper
Mississippi valley, the one north by way of the Great Lakes and
Erie Canal, or the contiguous system of railways, the other by the
Mississippi River. But in the next Congress (33d), in recognition
that the Alleghenies were not insuperable obstacles to railway
engineers, that transcontinental freights would naturally prefer
the east and west railway east of the Mississippi to the north and
south route by the river, and that the river was not the only out-
let from the lower Mississippi valley to the Atlantic, Seward will
be found saying :...." I deem only one terminus material to
be fixed, and that is the western terminus, which, I believe, ought
to be at San Francisco. In regard to the eastern terminus, while
I have my opinion about what would be the most expedient, and
proper, and advantageous location of that terminus, I am pre-
pared to surrender my convictions on that point for the purpose
of obtaining harmony in Congress in regard to the passage of
some bill that will accomplish the object. So far as the state
which I represent is concerned, I feel entirely confident that her
geographical position and commercial advantages will make the
city of New York the eastern terminus of any and of all roads
which may be made across the plains to the Pacific Ocean.'"

The intrusion of the scheme for a line from Lake Superior

* Congressional Globes Volume 30, page 750, 33d Congress, ist Session.

Seward had said in the debate on the Rusk bill in the second session of the
32d Congress, ** To me, .... a northern or a southern route are as nearly
equal as may be. You may make a route across the continent wherever you

58 THE UNION PACIFIC RAILWAY.

to the Pacific into the Pacific railway question in the 33d Con-
gress was due to two considerations :

(i) The great increase in population and wealth in Oregon
and Washington and in Minnesota and Wisconsin, the superiority
of the soil of the intervening territory over that of the " Great
American Desert " further south, and the digging of the Sault
Sainte Marie Canal gave the world a foresight of the future
importance of the extreme North and of the future need of a
transcontinental railway in that section ; Jefferson Davis, as Sec-
tary of War, under the law of 1853, ^^^ given these facts
additional importance by assigning one of his five surveying
parties to the region between the 47th and 49th parallels ; and
the work of Governor Stevens and McClellan had been, on the
whole, better done than the work on any other of the five divisions.
Jefferson Davis liimself had been so impressed by the result of
the survey of the Northern route and the probable cheapness of
railway construction on it that he deliberately changed the
estimated cost of construction by increasing it in his report
about 30 per cent, above the cost estimated by the engineers.*

please, there will be but two terminals of that road — one in the east, at New York,

and the other on the west, at San Francisco It is for this reason that I

have been satisfied not to raise the question about the location of the road."
Congressional Globe, Volume 26, page 766.

' From jP 1 1 7, 1 2 1 ,000.00 to $ 1 50,87 1 ,000.00. Senate Executive Documents,
33d Congress, 2nd session. No. 78, Volume I., page 11.

In 1852, Edwin F. Johnson, a noted railway engineer, prepared for publi-
cation a work on Pacific railways, in which he insisted that the future Northern
Pacific route was the best of all for a transcontinental railway. When Jefferson
Davis heard of the proposed book through Robert J. Walker, a fellow-member
of the cabinet, he went to New York and borrowed the manuscript of Johnson.
When he returned the manuscript, after a few days, he tried to convince John-
son that his conclusions were unjustified. His efforts were unsuccessful, how-
ever, and on his return to Washington he pushed through Congress the Act of
1853 for the general surveys. It is further charged that when he afterwards
assigned engineers to the several routes, he assigned to the Northern route
Stevens and McClellan, with whom he had most influence and from whom he^
expected to be able to get an unfavorable report. See Life of Thomas Hawley
Canfield, page 17.

SECTIONALISM AND LOCALISM. 59

(2) The McDougall-Gwin bill was a Southern measure, and
represented a combination of California, Texas, Memphis, and
Arkansas, Mississippi, and New Orleans against Saint Louis ; the
Northern Pacific scheme was intended to create a defection in the
Eastern party from the Saint Louis combination. In the wotds
of Representative Davis (Indiana), "It is plain and palpable

that the intention of constructing two roads is to

divert our attention from and finally defeat the Central route.
* Not north of the thirty-seventh parallel ' means the Gila, or
extreme Southern route."'

IV.

Under the law of 1853, Jefferson Davis, as Secretary of War,
sent into the field five corps of engineers, scientists and surveyors,
and the region between the Mississippi and the. Pacific was
divided into five divisions, corresponding to the five general
routes that had been urged by Pacific railway advocates.
These routes were designated as (i) the route of the 47th and
49th parallels, or the Northern route ; (2) the route of the 41st
and 42d parallels, "Overland route," "Central route" or "Mor-
mon Trail ; " (3) the route of the 38th and 39th parallels, or the
"Buffalo Trail;" (4) the route of the 35th parallel; and (5) the
route of the 3 2d parallel, or Southern route. The separate reports
were sent to Congress from time to time but not in a complete
form until January, 1855, and Secretary Davis* final report on the
surveys was made on the 27 th day of February, 1855. The
reports are in eleven large octavo volumes, amply supplied with
maps, profiles, tables, and engravings. Not only was the topo-
graphy of the country exhaustively described, but the geology ^^
botany, ornithology, zoology and anthropology of the various
parts of the Great West were dealt with so exhaustively as to
afford an excuse for embellishing the reports with copious illustra-
tions of cactus plants, sage brush, birds of gay plumage, rattle-
snakes, jack rabbits, prairie-dogs, and Root Digger Indians. The

* Appendix to Congressional Globe y Volume 29, page 962, 33d Congress, 1st
session.

60 THE UNION PACIFIC RAILWAY.

$150,600.00* of government money, appropriated for the purpose
of the surveys, had to be expended, and the result of the expendi-
ture was a mass of scientific information simply confirming the
belief, common before the surveys were made, that there were
several practicable railway routes across the plains and over the
Rocky Mountains. Jefferson Davis, being from the South, and par-
ticularly from Mississippi, could be pardoned by the public for
concluding in his report that "the route of the 32d parallel is of
those surveyed the most practicable and economical route for a
railroad from the Mississippi River to the Pacific Ocean," "the
shortest route," and the easiest to build.^ The public understood
from the reports, however, that a dozen routes were practicable, and
members of Congress had now no excuse for further delay in
satisfying the general demand of the public for a Pacific railway.
The second session of the 33d Congress began in December, 1854,
and the battle of the sections and localities was renewed with
increased vigor, each member of Congress urged and pushed on
by a clamoring constituency, and vying with his fellow Congress-
men in his efforts to overcome the centrifugal force of sec-
tionalism and localism by the superior force of the attraction of
the national center.

In the second session of the 33d Congress, the work was taken
up where it had been left at the end of the first session. The
Select Committee was continued in each House of Congress. The
efforts to secure some positive legislation on the subject of the

*In May, 1854, a deficiency appropriation of $40,000.00 was made, and in
August, 1854, was followed by a further appropriation of $150,000.00 for continu-
ing the explorations and surveys, and " for completing the reports of surveys
already made."

* Senate Executive Documents, 33d Congress, 2d session. No. 78, Volume
I, page 29. See also De Bow's Review for September, 1855 (Volume XIX.,
page 336). The surveys made under Secretary Davis' authority were critically
discussed in De Bow's Review for December, 1856 (Volume XXI., page 555)
and even by that representative periodical of Southern industry the conclusions
of the Secretary were not endorsed.

SECTIONALISM AND LOCALISM. 6 1

Pacific railway were exerted in a more systematic form. The two
committees, after extended conferences within themselves and with
each other, finally reached a compromise on the Douglas plan,
which first made its appearance in the Senate ; there it was intro-
duced in the form of a bill by Stephen A. Douglas on the 9th day
of January, 1855, and referred to the Select Committee of the
Senate. On the 15th day of the same month, it was reported
back to the Senate with amendments as a proposed substitute for
the Gwin bill (for two roads) left over from tfie preceding session.
The Douglas bill, as reported with amendments Hy the Select
Committee, provided for the construction of three lines of rail-
way, (i) one from the western border of the state of Texas to the
Pacific Ocean in California, to be known as the Southern Pacific
railroad, (2) one from the western border of Missouri or Iowa to
the Bay of San Francisco, to be known as the Central Pacific rail-
road, and (3) one from the western border of Wisconsin, in the
territory of Minnesota, to the Pacific Ocean in Oregon or Wash-
ington Territory, to be known as the Northern Pacific railroad.
The three lines were to be constructed in the following manrter :
The Secretary of the Interior, the Secretary of War and the Post-
master General were to advertise for and receive "sealed and
separate proposals for the construction of each or either of said

lines stating whether it be for the

Southern, Central, or Northern lines, and also, — First, the time in

which the parties proposed to construct the road

Second, the time in which such

parties will surrender and transfer, free of cost to the United

States, said road with its appurtenances . . .

. . and Third, the sum, not exceeding $300.00 per mile per
annum, for carrying the United States mails daily both ways on

said road for a period of fifteen years from the

complietion of the road ; and while in course of construction, for
the portion in use and at what rate per mile, for a like period, and
on the portions in use while being constructed, they will carry on

said road freights for government

purposes and from and after the expiration of

62 THE UNION PACIFIC RAILWAY.

said period of fifteen years, said transportation

for government purposes, shall be performed on

said road at reasonable prices, not exceeding those

usually paid for the time being on other first class roads, to be
ascertained by Congress in the event of disagreement between the
government and the owners of the road." A quantity of land,
"equal to the alternate sections for the space of twelve miles on
each side of said roads" was to be conveyed to the constructors
of the roads, together with a right of way of two hundred feet and
the right of taking material for construction from adjoining gov-
ernment lands. The Secretary of the Interior, the Secretary of
War and the Postmaster General, under direction of the Presi-
dent, were to enter into contracts with the contractors whose pro-
posals should be accepted, and the contractors were to deposit a
guaranty of $500,000.00 in bonds of the United States or of the
states, with the Secretary of the Treasury, to be withdrawn by
them in sums of $5,000.00 upon showing that like sums had been
expended on the lines. The roads, right of way, and property
were to be forfeited to the government upon the failure of the con-
tractors to comply with their contracts. " Whenever

said roads shall be surrendered to the United States,

so much of said roads as may lie within any of the states, shall with

their consent become the property of the . . .

. . states within the limits of which the same may be located,
subject to the use of the United States for govern-
ment services and to such regulations as Congress

may prescribe, restricting the charge for transportation thereon.

And all other states admitted into the Union

thereafter shall acquire the same rights." " No road shall be made

in the state of California without the authority of

the legislature of that state, and then only by virtue of the
authority of such state." If no proposals should be received on
the first advertisement, new advertisements were to be issued " once

in each year, until each of said lines shall be put

under contract unless Congress shall otherwise

SECTIONALISM AND LOCALISM. 63

order and direct." The route and termini weje to be located by
the contractors, within the limits proposed by the bill.*

The only serious amendment offered in the Senate was by
Mason (Virginia), who proposed that instead of permitting the
three cabinet officers to make definite contracts for the construc-
tion of the roads, the bill should require them to communicate
proposed plans and contracts to Congress for ratification. This
was done by Mason for the sole purpose of causing defections
from the ranks of the supporters of the bill. Mason was in the
forefront of the state-rights and strict construction opposition to
Pacific railway legislation, and had repeatedly said that he would
vote for no road at all.' That had been a favorite mode, on the
part of Southern Senators, of opposing Northern and Western
measures. Frequently, when the advocates of a Pacific railway
had seemed to approach unanimity, the Southern members had
separated them by offering some amendment that would precipi-
tate a quarrel between the New Orleans, Vicksburg, Memphis, and
Saint Louis parties. In this instance Mason caused the defection
of Chase and the Pennsylvania members, and Geyer (Missouri)
had taken fear lest the " Wall Street influence " (prominent by
reason of the fact that the selection of the route and termini had
been left to the contractors) should act against the interests of
Saint Louis, and favor the Iowa, Illinois and Lake roads, owned
by the Eastern party ; ' yet there was strength enough left to push
the bill through and it was passed in the Senate on the 19th of
February, 1855, by a vote of 24 to 21.

' Congressional Globes Volume 30, page 749, 33d Congress, id Session.
See map (i) at end of volume.

"Supra, page 49.

3 In debate, Geyer charged that California (desiring as much mileage as
possible), the Southern Pacific contractors (necessarily controlled by California
and Texas), and the Eastern capitalists controlling Illinois,' Iowa and the North- ;
west were united against Saint Louis, and his charge was not denied. .'
" When Wall Street, and the other interests I have named, are brought into
competition with a state that relies exclusively upon her own resources to build
her roads, as they are by this bill, the result is certain against the state," he
complained. Appendix to Congressional Globe, Volume 31, page 200, 33d
Congress, 2d Session.

64 THE UNION PACIFIC RAILWAY.

In the House of Representatives, the Douglas bill had a stormy
and thrilling parliamentary experience. Some unconsidered Pacific
railway bills had been left over from the first session in the House
of Representatives, and on the i6th of January, 1855, the
Douglas bill, in accordance with the arrangements entered into
by the Select Committees of the two Houses, was moved by Dun-
bar (Louisiana), as a substitute for the pending bill. Then
the House of Representatives proceeded to compress into one
week of the session all the parliamentary tangles that the wit and
ingenuity of members could contrive. Several unimportant
amendments were offered but rejected, until one of more moment
was offered January 18, by Davis (Indiana) to strike out of the
Douglas bill the provision for three roads and to substitute for it
a provision for one trunk line from San Francisco to the western
border of Missouri or Iowa, between the parallels of 39° and 41°,
afterwards changed to 36° and 43"^, north latitude, with branches
to Memphis and Lake Superior from some point between the
meridians of 103^^ and 105"^ west longitude. When this amend-
ment was proposed, McDougall, Chairman of the Select Commit-
tee and the mainstay of the Douglas bill, exclaimed. "If this
amendment is adopted, it will destroy the bill." This was the
signal for a profuse display of parliamentary pyrotechnics. The
air was full of motions of every character, from motions to strike
out enacting clauses, to frequent motions to adjourn, and the
previous question was called for at ever\- step. The Davis amend-
ment was adopted and the Douglas bill, as amended, was substi-
tuted for the pending bill, A motion for a final vote ^-as sustained
and then the vote reconsidered. Then a motion to recommit the
bill to the Select Committee was defeated and the vote reconsid-
ered, and the next vote to recommit was a tie of 103 to 103,
decided by the casting vote of Speaker Linn Boyd against recom-
mitting. Then the bill was passed by a vote of log to q;. After
the bill was fussed and the agony apparently over. Mace (Indi-
anaV on January 22, stated that he was "paired off'' with Edmun-
son (Virginia^, but had nevertheless, by some misunderstanding,
participated in the vote on the passage of the bill; he asked leave

SECTIONALISM AND LOCALISM. 65

to withdraw his vote ; thereupon his attention was called to the
fact that, by the same misunderstanding, he had participated in
the tie vote on the motion to recommit ; the vote on the passage of
the bill and the tie vote were therefore reconsidered, and the
motion to recommit was sustained by a vote of 105 to 91. On
the following day, January 23, 1855, a motion to reconsider the
last vote to recommit was laid on the table by a vote of 95 to 94.
Later in the session,' the 20th 'of February, when the Douglas
bill, passed by the Senate,' was sent to the House of Represen-
tatives from the Senate for its action, nothing was done with it —
the adverse sentiment of the House had already been expressed.

Thomas H.* Benton, aided by some Indiana and Ohio repre-
sentatives, was responsible for the defeat in the House of Repre-
sentatives. The Saint Louis influence insisted on either the one
central road or no road at all. And the year 1855 was not a time
when public confidence in Douglas or his measures was strong.
So many northern people and such a remarkably large foreign
population of Germans had been added to Saint Louis, that it
had ceased to be a stronghold of slavery. Maryland and Dela-
ware might be whipped into line on the Kansas-Nebraska bill,
but Thomas H. Benton was one of the two representatives that
voted against it. Douglas had been responsible in the Senate for
the abortive Gwin-McDougall bill providing for two roads, one
not north of the 37th parallel and the other from Lake Superior
to the Pacific Ocean — a direct blow at Saint Louis. After that it
was not difficult for Benton to consider any Pacific railway bill
emanating from Douglas a suspicious affair ; and particularly
when the making of the contracts and location of route and
termini were to be left with three cabinet officers (of whom two
were from the South) under the direction of Pierce, " the New
Hampshire paradox." Benton could say nothing worse of the
Douglas bill than that it was an " administration measure," and
the student of this decade will find in Benton's estimation of the
bill a sufficient reason for his opposition to it.

The most distinct development in the 33d Congress was that

' Supra, page 63.
5

66 THE UNION PACIFIC RAILWAY.

of what might be called, for want of a better term, " indi-
vidual confidence." The development that had taken place
in the states was duplicated in the single example of a national
railway. Between 1830 and 1835, railway building was little
above a succession of local experiments; by 1835, it was a "con-
dition and not a theory"; from 1835 to 1845, some of the states
(like Michigan and Pennsylvania) built and managed railways as
public industries, but by 1845, state building of railways had
ceased, and the states sold their railways to corporations; from
1845 to i860, the railways were built by corporations with the aid
of the states. Finally, after 1870, railways were built by corpora-
tions without aid from the states, but with their own means, supple-
mented by donations from directly interested local communities,
who looked upon the new railway rather as a private benefit to the
community than a public benefit to society. A step has been taken
even beyond this in the last decade of the century, and now when
a railway corporation wishes to build a railway, it builds it just
as an individual establishes a grocery, — not as a public enter-
prise, aided by public or private bonuses, but as a private project,
with the projector's own means, and for the profit expected by.
the projector from the operation of the business.

Up to 1850 the controlling idea was that the Pacific railway
was to be a " national highway," and ought to be built by the
national government or under its direct initiation and control.
The theory on which Asa Whitney acted was that he was §imply
an agent of the nation for the purpose'of accomplishing a national
object ; he was not projecting a private enterprise, which, on
account of incidental advantages to the nation, was deserving
of aid and stimulus from the nation — he was projecting a
national enterprise, that could only be accomplished through the
medium of individual effort, and in his view, when the project
should become a fact, the railway would be only a public or
national instrument, requiring individual effort and agency in its
manipulation and use. From 1850 to 1855 the national view of
the project was still predominant, though the individual feature,
while not fully understood and appreciated, was yet telt and con-

SECTIONALISM AND LOCALISM. 67

sidered. And as the commercial spirit of the North (or rather of
the East) was keener and quicker than that of the South ( partly
on account of the repressive influence of slavery), this " individual "
feeling is first shown in isolated passages in the speeches of
Northern statesmen. Seward, Chase and Douglas discussed the
personal, individual factor in the problem before 1855, but in
that year, in the debates in both Houses on the Douglas bill,
the idea seems to have sprung up in anight. The theory of the
Douglas bill was that anyone that wished to build a Pacific rail-
way should have the opportunity to do it. The grant of land was
considered as the contribution of a prudent landlord to a project
that would make the rest of the land more valuable. The con-
templated payments for carrying the mail may have been a trifle
high, but after all they were simply to be payments for services
rendered. The Douglas bill was individualistic in a great degree.
The industrial growth had given the railway builder confidence
in himself, and as " people have confidence in those who have
confidence in themselves," Congress had confidence in the "con-
tractors." The money centers were full of individuals, com-
panies and corporations, willing to undertake the building of
Pacific railways. Benton had taken a northern and eastern
speech-making trip during the fall of 1854, and when the
Douglas bill came up in the House, he had facts that justified
him in saying :

" I have turned my attention to private enterprise, and have
found solid men who are willing to take the preliminary steps
now, preparatory to the final assumption of the work. Congress
granting the necessary authority and confirming the right of way
through its territories, one mile wide on each side of the road.

" I would have preferred that Congress should have made the
road, as a national work, on a scale commensurate with its
grandeur and let out the use of it to companies, who would fetch
and carry on the best terms for the people and the government.
But that hope has vanished, and the organization of Kansas hav-
ing opened up the country to settlement, . . . . a private
company has become the resource and the preference. I embrace

68 THE UNION PACIFIC RAILWA.Y.

it as such, utterly scouting all plans for making private roads at
national expense, of paying for the use of roads built with our
land and money, of bargaining with corporations or individuals
for the use of what we give them. " '

Geyer was apprehensive of " Wall Street influence " and was
sure that it was behind an anti-Saint Louis project."

Texas, Louisiana, Mississippi, New Orleans and Memphis
were satisfied with a provision for a line from the western border
of Texas to the Pacific, though they had been found in vigorous
opposition to it on the dramatic death and resurrection of the
Rusk bill at the hands of Shields and Douglas, because they
thought they needed the opportunity to build and not the
means to build. " Wearied with the delay incident to a govern-
ment appropriation for this project, individual capitalists, partic-
ularly those of the South, are earnestly considering the propriety
of a road to connect San Diego with Charleston in South Caro-
lina .... From Charleston to Shreveport in Louisiana a
line of Railway connections already exists, or is in a state of
progress. The offer of alternate sections of land from Marshall
on the eastern limit of Texas to its western border, through the
best lands of the state, presents a strong inducement to capitalists
to construct such a road Although no serious objec-
tion appears to exist to the prosecution of this enterprise, yet
further consideration may diminish the confidence with which the
project is now regarded. The gradual progress of public senti-
ment, as it becomes enlightened by a better acquaintance with the
facts of the case, will in a few years, at furthest, determine defi-
nitely the course which this great achievement of modern science
and enterprise must pursue. " ^

The theory of the Douglas bill was expressed concisely and
perfectly by Congressman Bliss when he argued : "The people -

* Thomas H. Benton, Appendix to Congressional Globes Volume 31, page
73» 33d Congress, 2d Session.
'Supra, page 63 and note.

3 Historical Collections of the Great West, Volume II., page 448. By
Henry Howe. Published at Cincinnati in 1855.

SECTIONALISM AND LOCALISM. 69

of the southern portion of the Confederacy have confidence
enough in themselves to believe that they could construct the
road, through their section of the country, if Congress will give
them the privilege of competing in that matter. The people of
the central portion of the Union have confidence that they could
do it, and just such confidence inspires the people of the North."
"I admit that the passage of this bill does not give a certainty that
the three lines will be constructed. I do not care whether it will
be so or not. We cannot legislate against nature. If the lynx
eye of capital cannot perceive an advantage in constructing a
railroad at the north, the enterprise will not be engaged in. If
the natural advantages of the central line of railroad are not suffi-
cient to justify its construction, that line will not be put under
contract ; and so of the other line ; why, then, let people experi-
ment for themselves upon all these routes ; and if they do not
succeed in building them all, I ask, in the name of reason, what is
the objection ? What objection can there be to the construction
of a northern railroad, if it can be accomplished ? What objec-
tion, under like circumstances, can there be to the central or the
southern? No gentleman can reasonably object to it. "'

It was freely conceded that eventually there would be Pacific
railways to accommodate all localities and sections; the contention
of the sections and localities was now not which should be the
terminus of the only Pacific railway, but which should be the ter-
minus of the first Pacific railway. The progress of railways east
of the territorial line had been remarkable. The constitutional
scruples of the Virginia school had been overcome by the indus-
trial development of the West. Railways had been or were soon
to be completed to Saint Paul, Sioux City, Council Bluffs, Saint
Joseph, Independence (Kansas City), the southwest corner of
Missouri, and Fulton (Arkansas), and southern capital was ready
to build across Texas.*

The country west of the Mississippi was being rapidly settled,

* George Bliss, January 19, 1855. Congressional Cflobe Volume 30, page 329.

• Supra, page 68.

THE UNION PACIFIC RAILWAY.

and the argument that " if the government would give the right
of way, the Mynx-eyed capitalist' would do the rest" had much
force. The annexed table' shows the rapid expansion of railway
building after 1850, and in it may be found a proof that the spirit
of the Douglas bill was only a reflection of the spirit of the people
in 1855. It must be noted that in 1855 the country was on the
threshold of one of its periodic outbursts of railway building, and
that most of the building was in the Mississippi valley."

VI.

The 34th Congress (1855-1857) was well-nigh a blank in
Pacific railway legislation, as in everything else. True, the Select
Committee in each House was maintained, and a few bills were
referred to them. But no committee report or bill was taken up
or considered. The strength of Pacific railway legislation had
been in the Whig party assisted by Northern Democrats and
the Democrats of the lower Mississippi valley, and there had

1850

1851

1852

1853

1854

1855

1856

1857

1858

1859

x86o

'Number of miles
constructed.

1656

1961

X926

2452

1360

1654

3642

2487

2465

1821

X846

No.of miles in oper-
ation at end of year.

go2i

10982

12908

15360

16720

18374

220x6

24503

26968

28789

30635

*See the Democratic Review of 1852 (Volume XXX., page 229), for a clear
expression of the laissezfqire theory of building a Pacific road. That influential
periodical had formerly looked with favor on the Whitney project, but in this
article it deserted it, as giving to an individual too extended control of a large
part of the public domain. The article referred to was an argument for the con-
struction of the road as a business enterprise (with the aid of a moderate grant of
land) by eastern railway companies interested in it, as contrasted with individual
or governmental ownership ; and it expresses the spirit that dominated Congress
in 1855.

See also DeBow's Southern and Western Review for May, 1854 (Volume
XVI., page 506). "Exploration has convinced everyone that there are several
ways of connecting the waters of the Atlantic and Pacific by ordinary railways.
The obstacle to be surmounted is, not the location of a route, but what route to
choose of the number already located ; not the question of practicability, but
the combined one of availability and expediency. None will doubt the utility

SECTIONALISM AND LOCALISM. 7^

always been a majority in ea^h House of Congress in favor of the
general project of a Pacific railway, in spite of the opposition of
extreme state-rights Democrats like Lewis Cass in tlie North and
Mason and Hunter in the South. As frequently explained, the
dissensions had arisen over the particular projects, every one of
which was either too " magnificent " or failed to satisfy some
local or sectional interest. Mason frankly admitted, in 1853,
when it was proposed to survey routes to the Pacific : " I appeal
to Senators if this project can be fairly and legitimately
destroyed, to destroy it for the present session ; and I know of
no way of doing it, inasmuch as there is a fixed majority here in
favor of making a railroad from some point on the Mississippi
River, to some point on the Pacific Ocean, but by getting up an
internecine war among the friends of the measure; that is the way
we fortunately succeeded in defeating the friends of the measure
upon the bill itself." In the later treacherous days of the 33d
Congress — the Congress of the repeal of the Missouri Compro-
mise — even steadfast friends of the project, like Benton, could
not have confidence in bills that apparently aimed at the satisfac-
tion of all sectional and local interests, when the execution of the
law would be left in the hands of adherents of particular sections
and localities, like President Pierce, Stephen A. Douglas, and
Jefferson Davis. The reaction in the North against the repeal of

of the contemplated measure ; but all may very justly find exception to forming
a monopoly, or determining a line that shall contribute mainly to the benefit of
a section.

" The chief difficulty, therefore, which besets the proposition is the recon-
ciling of conflicting interests, and adapting preferred claims to a general
emergency: . . .

" Meanwhile, individual interest improves the opportunity of doing what
it can towards forwarding its own views. It associates itself into a com-
pany, and casts about for means and appliances to accomplish the stupendous
undertaking. It virtually attempts to take out of the hands of the government the
construction of the gigantic scheme ; and under the name, style, or title of " the
Northern Pacific," the " Central Atlantic and Pacific," or the " Southern Pacific
and Mississippi " Railroad Company, boldly offers to do the work which the
nation is too timid or too negligent to engage in, or which furnishes
politicians but too dangerous a platform. . . . "

72 THE UNION PACIFIC RAILWAY.

the Missouri Compromise in the preceding Congress (May 30,
1854) had disrupted the Whig party, and it was left helpless.
The contests of the fall of 1856, though they resulted in the elec-
tion of Buchanan and a majority of Democrats in each House,
had unseated many members of both Houses, and there was a
resulting feeling of inertia that produced no positive legislation
of importance. Politicians were too much occupied in watching
the contest in Kansas to discuss Pacific railway bills.

VII.

The outlook for Pacific railway legislation in 1857 was, on
the surface, favorable.

In June, 1856, at their national convention at Cincinnati, the
Democratic party had as a plank in their platform : " Resolved,
that the Democratic party recognizes the great importance, in a
political and commercial point of view, of a safe and speedy com-
munication by military and postal roads through our own terri-
tory between the Atlantic and Pacific coasts of this Union, and
that it is the duty of the Federal Government to exercise
promptly all its constitutional power to the attainment of that
object."'

In the same month, in Philadelphia, the delegates of the
Republican party had resolved : " That a railroad to the Pacific
Ocean by the most central and practicable route, is imperatively
demanded by the interests of the whole country, and that the
Federal Government ought to render immediate and efficient aid
in its construction, and, as an auxiliary thereto, the immedi-
ate construction of an emigrant route on the line of the rail-
road."''

In a letter written by Buchanan to the Chairman of the Dem-
ocratic State Central Committee of California, the candidate for
the Presidency had expressed himself in a few of his diplomatic

« McKee*s Platforms and Parties, page 55.
" Ibidem, page 59.

SECTIONALISM AND LOCALISM. 73

phrases as oeing " decidedly favorable to the construction of a
Pacific railroad."'

In his inaugural address, President Buchanan had intimated :
" It might also be wise to consider whether the love for the
Union which now animates our fellow citizens on the Pacific
coast may not be impaired by our neglect or refusal to provide
for them, in their remote and isolated condition, the only means
by which the power of the states on this side of the Rocky
Mountains can reach them in sufficient time to protect them
against invasion." '

In his first annual message, Buchanan had gone fully into the
subject of a Pacific railway, and had said in explanation of his

'The letter is found quoted in full by Senator Gwin {Congressional Globe,
Volume 41, page 44, 3Sth Congress, 2d Session) and is as follows:

"Wheatland, September 17, 1856.

Sir : I have received numerous communications from sources in California
entitled to high regard in reference to the proposed railroad. As it would be
impossible for me to answer them all, I deem it most proper and respectful to
address you a general answer in your official capacity. In performing this duty
to the citizens of California, I act in perfect consistency with the self-imposed
restriction contained in my letter accepting the nomination for the Presidency,
not to answer interrogations raising new and different issues from those pre-
sented by the Cincinnati convention, because th^t^cojiventioii has itself adoiited-
arsgolution in favorof th isg reatwork.

** I then d esife jo state briefly, that, concurring,^with__the cpnvejitionj I am

decidedly favorable to the construction of the Pacific railroad, and I derive the

authority to do this from the constitutional power * to declare war,' and the con- '

stitutional duty ' to repel invasions.' In my judgment. Congress possesses the '

same power to make appropriations for the construction of this road, strictly for

the purpose of national defense, that it has to erect fortifications at the mouth of

the harbor of San Francisco. Indeed, the necessity, with a view to repel foreign

invasion from California is as great in the one case as in the other. Neither will

there be danger from the precedent, for it is almost impossible to conceive that

any case attended by such extraordinary and unprecedented circumstances, can

ever again occur in our history.

" Yours, very respectfully,

"James Buchanan.

** To B. F. Washington, Esq., Chairman State Central Committee, California."

* Quoted by Senator Gwin, Congressional Record, Volume 41, page 49, 35th
Congress, 2d session.

74 THE UNION PACIFIC RAILWAY.

constitutional attitude, " Long experience has deeply convinced
me that a strict construction of the powers granted to Congress
is the only true, as well as the only safe, theory of the constitu-
tion. Whilst this principle shall guide my public conduct, I
consider it clear that under the war-making power, Congress
may appropriate money for the construction of a military road
through the territories of the United States when this is abso-
lutely necessary for the defense of any of the states against for-
eign invasion. The constitution has conferred upon Congress
power *to declare war,* *to raise and support armies,* 'to pro-
vide and maintain a navy,* and * to call forth the militia to repel
invasions.* These high sovereign powers necessarily involve im-
portant and responsible public duties, and among them there is
none so sacred and so imperative as that of preserving our soil
from the invasion of a foreign enemy. The constitution has,
therefore, left nothing on this point to construction, but expressly
requires that * the United States shall protect each of them (the
states) against invasion.* Now, if a military road over our own
territories be indispensably necessary to enable us to meet and
repel the invader, it follows as a necessary consequence, not only
that we possess the power, but it is our imperative duty to con-
struct such a road. It would be an absurdity to invest a govern-
ment with the unlimited power to make and conduct war, and at
the same time deny to it the only means of reaching and defeat-
ing the enemy at the frontier. Without such a road it is quite
evident we cannot * protect* California and our Pacific posses-
sions * against invasion.* We cannot by any other means trans-
port men and munitions of war from the Atlantic states in suffi-
cient time successfully to defend these remote and distant por-
tions of the Republic.**

In a later paragraph of the same message, Buchanan betrayed
the spirit that has made American statesmen bend and conform
constitutional dogmas to the material welfare of the people, has
given the American manufacturer protection on the pretext that
^it is merely an incident of taxation and a " regulation of com-
merce,** and has seen fit to inspect the butter that the American

SECTIONALISM AND LOCALISM. 75

pater fatnilias is to use on his breakfast table on the pretext that
the government is only taxing an imitation product known as
oleomargarine. And in the same paragraph Buchanan betrayed
the baneful influences under which his administration was to be
conducted and the close connection they were to have with the
evolution of the great industrial desideratum. He continued:

"The difficulties and the expense of constructing a military
railroad to connect our Atlantic and Pacific states have been
greatly exaggerated. The distance on the Arizona route, near
the thirty-second parallel of north latitude, between the western
boundary of Texas on the Rio Grande and the eastern boundary
of California on the Colorado, from the best explorations now
within our knowledge, does not exceed four hundred and seventy
miles, and the face of the country is, in the main, favorable. For
obvious reasons, the government ought not to undertake the work
itself, by its own agents. This ought to be committed to other
agencies, which Congress might assist, either by grants of land or
money, or by both, upon such terms and conditions as they may
deem most beneficial to the country. Provision might thus be
made not only for the safe, rapid and economical transportation
of troops and munitions of war, but also of the public mails.
The commercial interests of the whole country, both east and west,
would be greatly promoted by such a road, and, above all, it
would be a powerful additional bond of union. And although
advantages of this kind, whether postal, commercial or political,
cannot confer constitutional power, yet they may furnish auxiliary
arguments in favor of expediting a work which, in my judgment,
is clearly embraced within the war-making power.

" For these reasons, I commend to the friendly consideration
of Congress the subject of the Pacific railroad, without finally
committing myself to any particular route."*

The commendation of the President was supported by the
annual report of the Secretary of War (Floyd, of Virginia) who
assumed that " in the opinion of competent judges, there is now no

* Message of the President, Appendix to Congressional Globe, Volume 40^
page 6, 3Sth Congress, ist Session. ,

76 THE UNION PACIFIC RAILWAY.

controversy as to the most eligible route for the railroad. . . .
The route from El Paso to the Colorado, besides being the shortest
of all yet surveyed, possesses very decided advantages over others
in several important particulars . . . ; so that, in selecting a
railroad route between the Pacific and the valley of the Missis-
sippi, as far as our present information goes, that by El Paso
would be chosen, but the consummation of this project, freed from
all other difficulties, would require immense sums of money and
a great length of time."

The Postmaster General (Aaron V. Brown, of Tennessee) had
been accused by Congressmen of favoring the South by having
the overland mail carried from Saint Louis and Memphis by way
of Springfield (Missouri) and El Paso, instead of by the usually
traveled overland trail from Independence along the Platte River
and through the South Pass. His defense against the accusation
fills three columns in the Congressional Globed and the burden of it
is that " the Department supposed Congress to be in search of a
route that could be found safe, comfortable, and certain during
every season of the year, as well for the transportation of the
mails as for the accommodation of emigrants, and the future loca-
tion of a railroad to the Pacific," and that the El Paso route, in
his estimation, " filled the bill."

After a consideration of the attitude of the political par-
ties, as set out in their platforms and resolutions, and of the
administration as set out in letters, messages and reports, the
friends of Pacific railway legislation seemed to have good reason
to expect some concrete results from the Thirty-fifth Congress,
{1857-1859) particularly as the administration party, solidified by
the opposition of Whigs and Republicans after the repeal of the
Missouri Compromise, had a majority in both Houses,' but it was
not to be. The swifter the revolutions of the public will became,

' Report of Postmaster General, Appendix to Congressional Globe^ Volume
40, pages 25-28, 35th Congress, ist Session.

' The Senate stood, — 39 Democrats, 20 Republicans, 5 Americans ; the House
of Representatives stood, — 131 Democrats, 92 Republicans, 14 Americans.

SECTIONALISM AND LOCALISM. T1

the stronger the centrifugal force of sectionalism and localism was
exerted.

The first session of the 35th Congress convened December
7, 1857, and soon afterwards the House of Representatives,
upon the receipt of the President's message and accompanying
documents, undertook to distribute the several parts of them
among the standing committees. What disposition 'to make of
the portions relating to the Pacific railway was a question that
showed from the beginning the difficulties to be encountered.
Cobb (Alabama) tried to have the matter referred to his com-
mittee (on Public Lands), and Jones (Tennessee) tried to have
it referred to his committee (on Roads and Canals). In either
case, the matter would have been pretty effectually smothered, as
both Cobb and Jones and their committees were opposed to leg-
islation on it. Among the friends of the Pacific railway measure,
matters were little better. When Phelps (Missouri) moved for
a Select Committee (of which, according to custom, he would have
been chairman), eastern and northern friends were found oppos-
ing him. And when Bennett (New York) made a similar
motion, the Saint Louis and Memphis "friends" were found in
opposition. The contest for the " nursing of this particular bant-
ling" went so far that Bennett finally offered the following resolu-
tion, showing in its every line the fatal weakness of the project :

" Resolved, that so much of said message and accompanying

documents as relates to the subject of a Pacific railroad be referred

to a Select Committee of thirteen, to be appointed by the Speaker.

And in order to fairly represent the various sections of the

Union, said Committee shall be appointed from the different

States, as follows:

From the New England States, New York, Michigan, Wisconsin,

Iowa and Illinois (80 members) - - - - 4

From New Jersey, Pennsylvania, Ohio and Indiana (62 members) 3
From Maryland and Virginia (19 members) ...
From Delaware, Florida, North Carolina and Georgia (18 members)
From Tennessee, South Carolina and Arkansas (18 members)
From Kentucky, Missouri and Texas (19 members)
From Alabama, Mississippi and Louisiana (16 members)
From California - . . - . -

78 THE UNION PACIFIC RAILWAY.

It was quite unnecessary for Bennett to add in explanation of
his proposed resolution, " I do not want the southern route to be
a foregone conclusion in the organization of the committee.
For one, I shall go against any committee, whether standing or
select, unless it is understood that all the routes are to have fair
play." That Bennett*s sentiment was not entertained by him
alone appears from the fact that his resolution was defeated only
by a vote of 6i to 76. Finally on the proposition of Washburn
(Maine) a Select Committee of fifteen was appointed on the 25th of
January, 1858, seven weeks after the commencement of the session.
On the 9th of February following, when the committee asked
to be allowed a clerk, the pusillanimity of the opponents of the
project was displayed by a refusal of the House to grant the
request, by a vote of 87 to 42. During the session, five Pacific
railway bills were introduced and referred to the committee, but it
made no report.

In the Senate, in the first session, the usual Select Committee
of nine members on the Pacific railway was appointed, and
reported a bill on the i8th of January for a road from San Fran-
cisco to some point between the mouths of the Big Sioux and
Kansas Rivers. After the usual amendments had been suggested
for and in behalf of the several sections and localities from the
Gulf of Mexico to the 49th parallel, and for two roads and three
roads — the stock amendments, — the Senate, particularly in
view of the proceedings that had already been had in the House,
discreetly postponed the further consideration of the report of
the Select Committee to the following December, the second ses-
sion of the 35th Congress.

In the fall of 1858, in the second session of the 35th Con-
gress, the Senate resumed the discussion of the bill reported by
the Select Committee in the first session. The bill was of the
distinctly "equality of opportunity," individualistic, laissez faire
pattern, that had its spontaneous origin in the 34th Congress,
and was perhaps the legitimate fruit of the fungus growth of the
theory of " non-intervention " and " popular sovereignty." Its

SECTIONALISM AND LOCALISM. 79

title proclaimed its import to be " to authorize the President of
the United States to contract for the transportation of the mails,
troops, seamen, munitions of war, army and navy supplies, and
all other government service, by railroad, from the Missouri River
to San Francisco, in the State of California," — a clear intimation
that the only inducement to be held out by the government to
the projectors of Pacific railways was that of expecting the
national patronage to swell their gross earnings and perhaps
make net earnings possible. If land was to be given to the
builder of Pacific railways, it was to be the far-sighted gift of a
" prudent proprietor " who expected his magnanimity to be
rewarded by the increase in value of his other land. If money
was to be advanced to ambitious " desert-spanners " to aid them
in their undertaking, it was to be merely payment in advance for
future services. The Pacific railway scheme had well-nigh lost its
" nationality," at least in form, though in substance it was still to
be one of the " strong arms " of the national strength. In some
respects the bill was a peculiarly inconsistent confusion of politi-
cal and industrial theories. According to its provisions, the
President was to receive bids for performing the government
services by railroad after public advertisement for them in two
newspapers in each of the states and territories and the District
of Columbia, and open them in the presence of his Cabinet and
such others as might choose to attend; the bids were to provide
that the entire railway to be contracted for should be completed
within twelve years from the date of the contract, and to specify
what extent and portion of the railway, beginning at the eastern
and western termini, should be completed and put in operation
during each and every year, and at what time the bidder would
surrender the road, with appurtenances, to the United States for
the purpose of being transferred to the states through which
it should pass. The bidders were to receive a sum not in excess
of $500 per mile per annum for twenty years for carrying the
mails daily each way, and after the expiration of the contract the ^
mails were to be carried and other services to be performed at
reasonable rates. The President was to have authority to enter

^O THE UNION PACIFIC RAILWAY.

into contracts on the basis of the bids with the party " whose
proposal should be by him deemed to be most advantageous
to the United States," and the contractor was to deposit a guar-
anty of $500,000.00, or the value thereof in bonds of the states or
United States, to be withdrawn by him in sums of $10,000.00 as
rapidly as like sums had been applied by him to the fulfillment
of the contract. The land grant was to be twenty sections per
mile, together with two hundred feet for right of way, to be sur-
veyed upon the completion of each section of twenty-five miles of
the railway (one-fourth of the grant being retained on each
such section until the following section should be completed).
Further, upon the completion of each section of twenty-five miles,
the contractor was to receive $12,500.00 in United States bonds
for each mile completed, not exceeding in all $25,000,000.00,
the amount thus advanced to the contractor to be repaid by him
by the service and transportation provided for. Failure to fulfill
the contract was to entail the forfeiture of the railway, and a for-
feiture of the land grant was to be entailed by the failure to sell
one-half of it within five years and the other half within ten years
from the date of the patents. The eastern terminus was to be on
the Missouri River, belween the mouths of the Big Sioux and
Kansas Rivers, and the western terminus was to be at San Fran-
cisco ; in other particulars, the route was to be located by the
contractor.

The restriction of the eastern terminus even within such
limits was explained by Seward as follows : " I am one of the
Select Committee who introduced this bill. We took this prac-
tical view. We tried to ascertain what bill we could submit to
Congress that would obtain the votes of thirty-two members of
the Senate and one hundred and eighteen members of the House
of Representatives. In other words, what project is there, if any,
upon which one hundred and fifty-one votes can be concentrated
in the two Houses of Congress — for these constitute majorities in
both houses. It would seem no easy undertaking to devise a
plan which would secure one hundred and fifty-one votes on a
question so distracting. We found it so, for our committee con-

SECTIONALISM AND LOCALISM. 8 1

sisted of nine ; and if it had been an even number, we certainly
should have found it impossible, for a long time, to devise any
plan, or to find any route upon which we could get a majority
of the committee to concur. We succeeded in devising a system,
and a route which would secure five votes in our committee out
of the nine ; and we submit that as the best that could be done.
We have made sacrifices to opinion ; sacrifices that seemed to us
almost of principle ; sacrifices of devotion to local interests, for
the purpose of being able to offer a bill to the House with reason-
able expectation that a majority of each House of Congress could
be induced to accept it." ' Such a confession from one of the
most steadfast and far-sighted friends of Pacific railway legisla-
tion indicated the almost certain outcome of the work of the
35th Congress.

But there was a factor in the problem that had been up to
this time below the surface — a wide and general cause of the
extreme development of the evils of sectionalism and localism,
that had been thoroughly appreciated and felt but not accorded
outward expression. A legislative body is in most respects only
an exaggerated man ; it has its feelings, its controlling ideas, its
modes of thought, its moods, its phases of disposition — its per-
sonality. When a man has a physical or mental ill, he tries to
persuade himself that he has it not, until the fact happens to
receive an " outward expression " by word of mouth or pen, either
from the victim or an observer. Men as well as children " think
out loud." The fact that there was a fatal incongruity or incon-
sistency in the fundamental organization of the government of
the United States,. in that an industrial institution whose existence
was incompatible with unity, had received recognition in the 'fun-
damental law, and in a certain sense had been made a part of it
— that fact was thoroughly appreciated and felt for many decades;
but the American people tried to persuade themselves that there
was no inconsistency, no incongruity, no incompatibility — until
the fact was openly declared. The fact was the same and had
been the same; it simply became objectified and active; self-

^ Congressional Globe J Volume 38, page 1584, 35th Congress, ist Session.
6

82 THE UNION PACIFIC RAILWAY.

deception was no longer possible. This was the state of things
from a political standpoint, in 1859, and it was reflected in (or
reflected from) the state of industrial society. Statesmen had
tried to persuade themselves that a Pacific railway, as a national
project, was a possibility, had tried to persuade themselves that
there was a nation, but all the time, in the undertow of thought
and feeling, there was too keen an appreciation of a want of unity
and nationality. The history of the Pacific railway has been mar-
velously woven in and out among the threads of national history.
Aside from the great and overwhelming institution of slavery
itself, there is nothing that has recorded so delicately and accu-
rately the ebb and flow of the tide of nationality as the Pacific
railway. Slavery had been a sectional institution ; the question
for the Rebellion to decide was whether it might remain such
in a nation in which, in another section, it was not in existence
or must have a separate nation for itself. The question of a
Pacific railway was much the same. Was it to be a measure for
the benefit of a section or was it to be a national benefit ? The
two questions were answered in much the same way. As a matter
of form, each was largely handled as a matter incidental to the
prosecution of the struggle of arms ; but as a matter of substance,
the abolition of the one and the creation of the other were
simply the means to the greater end of national unity. So much
has been said at this point that the importance of the 35th Con-
gress in the subject may be understood. It was the time of
awakening — the time of conviction.

For about two weeks the " equal opportunity " bill had been
under consideration, and every western interest from Minnesota
and Wisconsin to Louisiana and Texas had offered amendments
to the first section, providing for the eastern terminus. The
claims of each had been advanced in the usual and customary
manner, and each Senator had satisfactorily " explained his posi-
tion " to his constituents. Jefferson Davis, now Senator from
Mississippi, had fairly earned the palm for the craftiest and
shrewdest amendment, providing authority to the President " to
contract for . . . . government service " by railway, and

SECTIONALISM AND LOCALISM. 83

^* that for . . . the advantages thus to be secured to the
United States in the use of said road and further to aid in the
construction of said road, $10,000,000.00 are hereby appropriated
to be advanced as follows, — when one twentieth part of said
road ... is completed, . . . the President shall cause
to be advanced to the contracting party the twentieth part . .
of the whole sum of money .... appropriated and in
* like manner, when each succeeding section of equal extent is
completed, ... an equal amount shall be advanced to the
contracting party until the whole road is completed . . . . "
According to this amendment, which Davis announced to be an
expression of the views of the minority of the Select Committee,
the shorter the railway, the more money per mile could be advanced
to the contractor. That would have insured the building of the road
on the line of the 32d parallel — Davis* favorite route, the route
recommended by him as Secretary of War, — for the shortest dis-
tance between the states was from El Paso del Norte on the west-
ern border of Texas to Fort Yuma on the eastern boundary of Cali-
fornia. ' A railroad was alieady projected and partly built from
Shreveport and New Orleans across the state of Texas to El Paso
del Norte, with the liberal aid from the state of Texas, of $6,000.00
in money and 10,000 acres of land per mile of road. This, with
a line from San Francisco to San Diego and Fort Yuma, would
have given the South a through line from the lower Mississippi
and southern centers to San Francisco. But the amendment was
not adopted.

The provision for giving authority to the President to make
contracts with the bidder " whose proposal should be by him
deemed to be the most advantageous to the United States " had been
wholly unacceptable to the northern and central Senators. In the
preceding Congress, one of the worst things that Benton was able
to say of the Douglas bill was that it was an " administration

* The distance from El Paso del Norte to Fort Yuma was estimated at about
six hundred miles, while the distance from points on the Missouri and Mississippi
Rivers to the eastern border of California was variously estimated at from nine-
teen hundred to twenty- two hundred miles.

84 THE UNION PACIFIC RAILWAY.

measure." It was now considered that Buchanan, in his first
annual message' had expressed a preference for the route of the
parallel of 32° north. It was bitterly charged that an act for a
mail route from Saint Louis to San Francisco, passed in 1857, had
been intended to provide an overland mail along the Platte val-
ley and through the South Pass, but had been so construed by the
administration, and particularly by the Postmaster General, that
the route had followed the southern trail through Albuquerque ;
that the bids or proposals relating to the central overland route
had been rejected, and an arbitrary route laid out by the depart-
ment. This had led to a long explanation and defense by the
Postmaster General in his first annual report,' though even
Douglas, who was justly considered friendly to the administration,
admitted that the wishes and purposes of Congress had been
thwarted. The President was said to be under the " personal
influence " of Slidell, of Louisiana, and the bent of his adminis-
tration was conceded to be favorable to the South in its tenden-
cies. This North vs. South feeling had found many covert means
of expression, when on the 6th day of January, 1859, Iverson of
Georgia refused to longer conceal the real difficulty, and gave
" outward expression " to the thought and feeling that made a
Pacific railway, depending on Federal initiation, an impossibility
until 1862. "If one road is provided for and the route is left
open to be selected by the company who shall undertake it, a
northern route will be adopted, making its immediate connections
with the northern and northwestern roads, and pouring all its
vast travel and freight over those roads and into the northern
states and cities of the Union." "Northern capitalists shun all
southern investments as if the very touch was pollution. And,
Sir, do you think that these feelings, these opinions, these preju-
dices would not operate in the selection and construction of a
Pacific railroad? I believe that the time will come when the slave
states will be compelled, in vindication of their rights, interests,

* Supra, page 73 et seq.

* Supra, page 76.

• SECTIONALISM AND LOCALISM. 85

and honor, to separate from the free states, and erect an inde-
pendent Confederacy; and I am not sure. Sir, that the time is not
near at hand when that event will occur. At all events, I am satisfied
that one of two things is inevitable; either that the slave states
must surrender their peculiar institutions, or separate from the
North. There is but one path of safety for the institution of
slavery in the South when this mighty northern avalanche of
fanaticism and folly shall press upon us ; and that path lies
through separation and a southern Confederacy. * No Union, or
no slavery' will sooner or later be forced upon the choice of the
southern people. It is because I believe that separation is not
far distant ; because the signs of the times point too plainly to
the early triumph of the Abolitionists, and their complete posses-
sion and control of every department of the Federal Government ;
and because I firmly believe that when such an event occurs the
Union will be dissolved, that I am unwilling to vote as much land
and as much money as this bill proposes to build a road to the
Pacific, which, in my judgment, will be created outside of a southern
Confederacy, and will belong exclusively to the North. The public
lands now held by the United States, as well as the public treasury,
are the joint property of all the states and the people of this
Union. They belong to the South as well as to the North; we are
entitled, in the Union, to our just and equal share, and if the Union
is divided, then we are no less entitled to a fair proportion of the
common fund. What I demand, therefore, is that the South
shall be put upon an equality with the North, whether the Union
lasts or not; that in appropriating the public lands and money,
the joint property of all, in connecting the Atlantic and Pacific
Oceans by railroad, the South shall have an equal chance to
secure the road within her borders, to inure to her benefit whilst
the Union lasts, and to belong to her when, if ever, that Union
is dissolved. For the purpose of accomplishing my object, I
move that this bill be recommitted to the special committee who
had charge of the subject at the last session with instructions to
bring in a bill providing for the construction of a railroad on

86 THE UNION PACIFIC RAILWAY.

each of two routes to the Pacific Ocean."' The bill was not recom-
mitted, but futile efforts were made to perfect this bill in the Sen-
ate. The debate was transformed into a regulation pro-slavery,
anti-slavery war of words, every hour of which showed more con
clusively the impossibility of positive Pacific railway legislation in
the 35th Congress. When Iverson*s motion was, on motion of
Doolittle (Wisconsin), modified to provide for the old Douglas
plan of " a northern, a central, and a southern Pacific railroad,'*
Hale, with a touch of irony, contributed the following apt descrip-
tion of the motion: " This, then, is a proposition to instruct the
committee to bring in a bill for a northern and southern route,
looking prospectively to the dissolution of the Union, so that the
South and North shall each have a railroad to the Pacific. The
amendment of my friend from Wisconsin, I suppose, is to put in
a central route, so that if there are a few who stick to the old con-
stitution, who do not go off with either of the extremists, . . .
they may have a conservative, national road, a middle ground,
what the classics would call tutissimo medioy The theory of
union and disunion was discussed for several days, but the pro-
priety of its application to the particular subject of the Pacific
railway was never questioned.

After the debate had taken such a direction, it was useless for
Green (Missouri) to try to unite the sentiment of the Senate
on a modification of the original one-road bill providing for
" two branches, one on the south, commencing not south of
Fulton, in the state of Arkansas, the other on the north, com-
mencing not north of the mouth of the Big Sioux, and connect-
ing at the most practicable point not farther west than the one
hundred and second degree of west longitude."

Wilson ( Massachusetts ) and Bigler ( Pennsylvania ) were

* Congressional Globe, Volume 41, pages 243-244, 35th Congress, 2d Ses-
sion.

Wilson, of Massachusetts, called the route of the 32d parallel, the " desert
and dis-union route." Congressional Globe, Volume 41, page 245, 35th Con-
gress, 2d Session.

» Ibidem, page 326.

SECTIONALISM AND LOCALISM. 87

raore successful (temporarily) with an amendment providing that
the entire single road should be divided into three equal grand
divisions, for each mile of which on the eastern and western divis-
ions, twenty sections of land should be donated and $12,500.00
in bonds advanced, and for each mile of which in the middle
division, no land was to be donated, but the bonds advanced
were to be doubled in amount, $25,000.00 per mile. This was
not found in the final form of the bill, though it was temporarily
incorporated with slight modifications^ in the bill under consid-
eration. Its importance consists in its later application in the
acts of 1862 and 1864, and it is the first full recognition of the
lack of uniformity in the quality of lands and facilities for rail-
way building between the Missouri River and Pacific Ocean.

Wilson later offered an amendment for the location and con-
struction of a road between the 34th and 43d parallels from some
point on the Missouri River, between the mouths of the Big Sioux
and Kansas Rivers, to San Francisco, directly by the Federal
government, through the agency of a board of five commis-
sioners to be appointed by the President, by and with the advice
and consent of the Senate, for whose use, during the first year,
$10,000.00 should be appropriated. This amendment was defeated
by a vote of 13 to 32.'

After the waste of almost an entire month in changing,
re-changing and transforming the original bill reported by the
Select Committee after its many concessions, it had taken a
form in which its best friend could not have recognized it, and
Gwin himself disowned it. The bill in its final form, passed
by the Senate on the 27th of January, 1859, t)y a vote of 31 to
20, had been proposed by Bell (Tennessee) as satisfying the
desires of the Senate elicited in the long debate, and provided
that the Secretary of the Interior should advertise for eight
months in two newspapers in each state for "separate proposals
for the construction and working of three railroads from the
valley of the Mississippi to the Pacific Ocean," a northern, a

' Congressional Globe, Volume 41, pages 577, S78 and 602, 35th Congress,
2d Session.

88 THE UNION PACIFIC RAILWAY.

central, and a southern Pacific railway. The proposals should
specify : first, the time within which each road would be com-
menced and completed ; second, " the amount, or extent, and
description of the aids, facilities, and privileges which will be
expected or required from the government, whether consisting
of land, money, or both ; and, if in part of money, whether in
the shape of a loan or otherwise ; and, if a loan, when and how
to be refunded ; " third, the rates of charges for government
services ; fourth, at what time the road should be surrendered to
the government ; fifth, the guarantees proposed for the faithful
fulfillment of any contract made, and the imposition of fares and
charges neither excessive nor exorbitant. The proposals were
to be sealed, and were to be opened by the Secretary of the
Interior in the presence of the other heads of departments before
the first session of the next Congress, and copies of them were
then to be transmitted to each House of Congress as soon as
organized.

The work on the bill in the Senate had a fit ending. When
the vote on the passage of the bill had been announced, the
Congressional Globe bears evidence of the following proceedings :

" The Presiding Officer. The title of the bill will be read.

[The reading of the original title ot the bill was greeted- with great
laughter].

Mr. Gwin : Inasmuch as I think we have performed a great day's work,
and consummated the greatest farce that ever was known in any legislation, I
move that the Senate adjourn.

Several Senators : Let us change the title of the bill.

Mr. Bell : I call the Senator from California to order. He has no right to
denounce any proposition adopted by the Senate, in such terms.

Mr. Gwin : What does the Senator say ?

The Presiding Officer : Senators must come to order.

Mr. Gwin : I say and I repeat it, it is a farce. The Senator from Tennes-
see knows where to find me.

Mr. Bell : I do not mean —

The Presiding Officer : The Senator from California and the Senator from
Tennessee are not in order. The question is on the motion to adjourn." '

' Congressional Globe^ Volume 41, page 634, 35th Congress, 2d Session.
It may merely be a matter of justice to add that on the following day. Senator

SECTIONALISM AND LOCALISM. 89

Then the title * was amended so as to read, "A bill to author-
ize and invite separate proposals for the construction of a railroad
from the valley of the Mississippi to the Pacific Ocean, upon the
separate routes."'

In the House of Representatives, in this second session, some
Pacific railway bills were introduced, but no action was taken on
them. The Select Commitee in the House, out of courtesy to
Representative Curtis, of Iowa, permitted him to report a bill
from it, but nothing further was done. When the "farce" passed
by the Senate was sent to the House of Representatives for con-
currence, that body did not even take time to laugh at it.

VIII.

The characteristic feature of Pacific railway legislation — or
attempted legislation — from 1859 to 1861, was the corporation
through the medium of which its objects were expected to be
accomplished. There was nothing new in the scheme of land
grant or other government aid, and the squabble of localities and
sections for the benefits of the route and termini have a familiar
ring.

In his annual message of 1859, Buchanan gave the project a
kindly impetus by again expressing " a most decided opinion in
favor of the construction of a Pacific railroad, for the reasons
stated in my last two annual messages." The President gave no
offense by seeming, as in a former message,^ to indicate a pref-
erence for a particular route, but amplified his opinion of the
means that should be employed in the undertaking. " I repeat
the opinion contained in my last annual message, that it would
be inexpedient for the Government to undertake this great work

Gwin offered to the Senate a quite sufficient apology for his remarks on this
occasion, which by the standard acknowledged in that body were undoubtedly
less elegant than true.

*For the original title, and a synopsis of the original bill see pages 78 to 80
supra.

^Congressional Globe ^ Volume 41, page 634, 35th Congress, 2d Session.

3 Supra, page 75.

90 THE UNION PACIFIC RAILWAY.

by agents of its own appointment and under its direct and exclu-
sive control. This would increase the patronage of the execu-
tive to a dangerous extent, and would foster a system of jobbing
and corruption which no vigilance on the part of federal officials
could prevent. The construction of this road ought, therefore,
to be intrusted to incorporated companies, or other agencies,,
who would exercise that active and vigilant supervision over it
which can be inspired alone by a sense of corporate and indi-
vidual interest." '

In the House of Representatives of the 36th Congress, the
Pacific railway had at last found a champion in Samuel R. Cur-
tis, of Iowa. In order to find an expression in positive law, an
idea must have an aggressive advocate in the turbulent Lower
House. Moreover, the Democratic majority in the 35th Congress
had been replaced by a Republican plurality' of aggressive, com-
bative representatives of Northern anti-slavery, anti-secession pro-
clivities, like John Sherman and "Tom " Corwin, of Ohio ; Col-
fax, of Indiana ; Thaddeus Stephens, of Pennsylvania ; Charles
Francis Adams, of Massachusetts ; Roscoe Conkling, of New
York ; and William Windom, of Minnesota. There was an unus-
ual percentage of new men, and the House was a trifle gruff and
(luite too intolerant in disposition. The " previous question "
was a favorite weapon in this Congress and was wieldejd unspar-
ingly ; personal charges and recriminations were the sauce of
debate in the House.

On the 9th of March, i860, in accordance with a resolution
of an earlier date, a Select Committee of fifteen on the Pacific
railway was appointed by the Speaker, with Curtis as chairman.
On the 26th of the same month, Curtis introduced a bill and had
it referred to the Select Committee, which, in turn, reported a
bill on the 13th of April following. The majority report of the
Committee was signed by only nine of its members, and there

» Appendix to Coftg^trssiotta/ G/i.^^ Volume 46, page 6, 36th Congress, ist
Session.

* The House of Representatives stood. — loi Democrats, 1 13 Republicans^
^3 Independents^ McKee*s Platforms and Parties, page 61.

SECTIONALISM AND LOCALISM. 9 1

were two minority reports. The majority report provided for
one central road to San Francisco, by way of Great Salt Lake,
with two branches from the western boundaries of Iowa and Mis-
souri. The minority report of Cyrus Aldrich (Oregon) favored
one road on the Northern Pacific route. The minority report of
Hamilton (Texas) provided for two roads, one on the route of
the 3 2d parallel, and the other on the central route favored in the
majority report. Phelps (Missouri), Taylor (Louisiana), and
Smith (Virginia) concurred in none of the reports. Henry Win-
ter Davis (Maryland) concurred in the majority report, except
as to " the plan of construction."' The plan of construction
was the only new feature in the bill. It provided for the con-
struction by a "company" consisting of forty-five persons*
named in the bill and of such others as they should associate with
them, who should be aided in their undertaking by an issue of
United States bonds to the extent of not more than $60,000,-
000.00, and by a land grant of the alternate sections (odd num-
bers) within one (!) mile of the road. The bonds were to bear
interest at five per cent, and to mature in thirty years ; and until
repaid to the government by the services performed by the com-
pany, the amount of them was to be secured by a first lien upon
the property of the company. Whether the company was to be
incorporated was open to question, under the terms of the bill.
An amendment was offered by Reagan (Texas), to make the
body of men named in the bill mere trustees for the formation
of a company, instead of the company itself. After two days of
debate and nothing accomplished, the bill was re-committed to
the Select Committee. On the 14th of June, i860, the commit-

' House of Representatives, Reports of Committees, 36th Congress, 1st Ses-
sion, No. 428.

' Of the men named in the bill, seven were from New York ; five from
Pennsylvania; four each fiom Illinois, Iowa, and Missouri; three each from
Maryland, Ohio, Indiana, California, and Massachusetts ; two each from Michi-
gan and Oregon ; and one each from Virginia and Tennessee. It was expected
by the committee that the Southern states would either not participate in the
construction of the central line, or would be given charge of the southern line, if
it should be provided for by amendment of the bill.

92 THE UNION PACIFIC RAILWAY.

tee again reported, and the further consideration of the bill was
postponed to the following December, when the second session
of the 36th Congress would begin. In the Senate, during this
first session, a perfunctory notice was given by Gwin that he
would call up for hearing in the early part of April, i860, the
bill that had been under consideration in the Senate and had
been emasculated by amendment before its passage ; but the
futility of pushing the project at that time was too manifest and
the measure was not called up.

Not long after the beginning of the second session, Curtis
called up, on December 18, i860, the day to which it had been
postponed, the bill reported by the Select Committee, entitled "a
bill to secure contracts and make provision for the safe, certain,
and more speedy transportation of troops, munitions of war, mil-
itary and naval stores between the Atlantic states and those of
the Pacific, and for other purposes," for the purpose of having
it made a special order for the consideration of the House on a
future day. A vigorous parliamentary combat was caused by a
point of order raised by Branch (North Carolina), and Smith
(Virginia), the representatives of the extreme Southern state-
rights opponents of the Pacific railway ; it was insisted by them
that the rule requiring " a motion or proposition for a tax or charge
upon the people " to "receive its first discussion in Committee of
the Whole House," applied to this bill, because it proposed the
issuance of bonds in aid of the construction of the railroad ; and
the Speaker decided the point in favor of the obstructionists. This
was a vital point, because the reference of the bill to the Commit-
tee of the Whole was tantamount to its defeat, as it would there
be taken up only in its order on the calendar and could not be
taken up as a special order in the Committee of the Whole with-
out unanimous consent, not being a general appropriation bill.
The result of this effort on the part of the minority, by technical
means, to defeat the bill, which had been on ultra-sectional lines,
and marked by much bitterness and personal feeling, was only
to arouse a feeling of resentment in the majority. Fire was
fought with fire. Two days afterwards, on the 20th day of

SECTIONALISM AND LOCALISM. 93

December, i860, a bill "granting land in alternate sections to aid
in the construction of certain railroads in the Territory of
Nebraska," was reached on the calendar, and taken up by the
House in Committee of the Whole. John Sherman promptly
moved an amendment in the nature of a substitute, and Curtis
moved to amend the amendment by the substitution of a bill
almost identical with the Pacific railway bill reported by the Select
Committee. Galusha Grow, of Pennsylvania, occupied the chair
and was in sympathy with the Northern majority. The amend-
ments of Curtis and Sherman were promptly adopted. Under
the technical rules of the House of Representatives, after the
adoption of the substitute, amendment could be only by addi-
tional sections, and each such section proposed was promptly
rejected by the united majority. The Committee of the Whole
reported to the House that it had " had . . . under consid-
eration . . . the bill . . . granting land in alternate
sections to aid in the construction of certain railroads in the Ter-
ritory of Nebraska," and recommended " that the bill, as amended,
do pass." Curtis demanded the previous question on the bill
and amendment, the majority seconded the demand for the pre-
vious question, and the amendment was concurred in. After
engrossment, Curtis again demanded the previous question on
the passage of the bill, and the yeas and nays were called by the
Clerk in the midst of such an uproar and turmoil and confusion
that responses could hardly be heard. Motions to adjourn and lay
on the table were thrust aside as coming too late to be entertained
during the roll-call. The bill was passed by a vote of 95 to 74,
and the title changed so as to be almost identical with that of
the bill reported by the Select Committee. Thus the first Pacific
railway bill passed by the House of Representatives was dra-
gooned through, by a rough -shod majority, without debate and
without discussion, and by the perverted use of the technical
rules of parliamentary procedure. The over-ridden minority
could not complain with good grace, though they wailed pite-
ously at the disregard of their rights, and Reagan called it a
"contemptible trick ;" — the minority had adopted the same

94 THE UNION PACIFIC RAILWAY.

method in opposing the bill, and had been temporarily sue-
cessful ; — they had found their perversion of the rules of the
House a boomerang. But the majority had overdone its work.
The bill passed was crude and imperfect, well deserving the name
given it by Senator Lane, a " bill of abominations."

As sent to the Senate, the bill provided for a central railway
I with two branches on the east from the borders of Iowa and
Missouri uniting within two hundred miles west of the Missouri
River, and thence proceeding west by way of Great Salt Lake to
San Francisco, and for a southern railway with two branches
from the western borders of Arkansas and Louisiana, uniting
near the meridian of 97° west, and thence proceeding on the
route of the 32d parallel to Fort Yuma and north to San Fran-
cisco. The work on the central route was to be performed by a
company of fifty-three persons named in the bill, and persons
associated with them, who should be incorporated under the
laws of the states and territories through which the road should
pass. The work on the southern line was to be done by the
Southern. Pacific Railroad Company, already chartered by the
State of Texas for the building of the line from Shreveport to El
Paso del Norte. The aid to be extended was the grant of one
section of public land per mile for the central line, and of six
sections per mile for the southern line (except in California,
where the grant was to be of ten sections per mile), and a loan
of bonds (secured by a first lien on the property) of from
$12,000.00 to $46,000.00 per mile, not exceeding in all, $60,000,-
000.00 for the central line and $36,000,000.00 for the southern
line, to mature in thirty years, with interest at five per cent, all to
be repaid to the government by services for the government.
When the Senate had finished the consideration of it on the 30th
day of January, 1861, it was passed by a vote of 37 to 14, with
forty-five amendments. A northern line and a branch from Sacra-
mento to Portland had been added, and the list of incorporators
had been increased to more than one hundred, and their powers
restricted ; it had also been provided that thirty per cent of the
bonds should be retained until the entire work was completed.

SECTIONALISM AND LOCALISM. 95

and that the corporators should have no right or title in the
bonds or land until incorporated and their charter approved by
Congress. The manner of passing the bill in the House of
Representatives had made its enemies in the Senate vindictive ;
there the South had more nearly equal representation with the
North, and the advocates of the central line, in order to secure
the votes of Oregon, Minnesota, and Wisconsin and other advo-
cates of the northern line, had to submit to the burden of amend-
ments ; besides, the bill had been too hastily considered by the
House, and was seriously defective in many particulars.

When it was returned to the House of Representatives for
concurrence in the amendments of the Senate, Curtis and Sher-
man still had the solid majority with them, and were hopeful of
securing the accession of the House to the demands of the Sen-
ate. But the attention of both branches of Congress was taken
up with matters of greater and more vital importance, and, as
the venerable Crittenden suggested in the Senate, the project of
a Pacific railway had to give way to questions of national life and
death. Besides, if the Senate amendments should be concurred
in, it was foreseen that the bill would be too crude and unwieldy
to produce practical results. Again, only eighteen days of the
session remained, and the appropriation bills and other business
always massed at the end of the short session, made it impossi-
ble to expect enough attention for the bill to carry it through.

As to the bill of 1860-1861, " Gwin says, in h\s Memoirs , that
there was a large majority in the Senate in favor, and that * there
was an equally large majority in its favor in the House, but the
majority of that body determined to defeat its passage then in
order to give the credit of inaugurating this great system of
transcontinental railroads to the incoming administration of Mr.
Lincoln.' "' But such an explanation is hardly satisfactory. The
truth is that the bill was simply crowded out by other business.
Senator Gwin's opinion was undoubtedly colored by his Southern
sympathies.

' Bancroft, History of California, Volume VII., page 527.

CHAPTER IV.

THE CHARTER.
I.

In the light of the history of the Pacific railway from 1845
to i860, one is not surprised to find in the platform of the
Republican party, adopted by the national convention at Chi-
cago in May, i860, a plank "That a railroad to the Pacific
Ocean is imperatively demanded by the . interests of the whole
country ; that the Federal Government ought to render immedi-
ate and efficient aid in its construction ; and as preliminary
thereto, a daily overland mail should be ^promptly established;"
and in the Charleston platform of the Democratic party adopted
in April, i860, a more cautious resolution as follows :

" Resolved, That one of the necessities of the age, in a mili-
tary, commercial and postal point of view, is speedy communica-
tion between the Atlantic and Pacific states ; and the Democratic
pfarty pledges such constitutional government aid as will insure
the construction of a railroad to the Pacific coast at the earliest
practicable period." In the Baltimore platform of the branch
of the Democratic party that had withdrawn from the Charleston
convention, the resolution of the latter was duplicated (in June,
i860) almost literally as follows: "Whereas, One of the great-
est necessities of the age, in a political, commercial, postal and
military point of view, is a speedy communication between the
Pacific and Atlantic coasts, — Therefore, be it resolved. That the
Democratic party do hereby pledge themselves to use every means
in their power to secure the passage of some bill, to the extent of
the constitutional authority of Congress, for the construction of
a Pacific railroad from the Mississippi River to the Pacific Ocean,
at the earliest practicable moment."

THE CHARTER. 97

The short session of Congress following a presidential elec-
tion is almost always a "do-nothing" session, particularly when
there has been a radical change in public sentiment, as expressed
at the polls. The election in i860 of a Republican President in
Lincoln and a majority of substantial opponents of slavery in the
Republican Representatives and Senators of the Northern con-
stituencies was a severe rebuke to the party dominant in Wash-
ington, and left its representatives in no disposition to transact
any but the most perfunctory public business in the session of
1 860- 1 86 1. When the special session of the Thirty-seventh Con-
gress, called by President Lincoln's proclamation, convened on
the 4th of July, 1861, the " friends " of the Pacific railway found
that the progress of events had brought to their project condi-
tions more favorable than it had ever before enjoyed.

The secession of the eleven Southern states had taken from
both Houses of Congress the most vigorous opponents of a
Pacific railway to be constructed by the aid of the government. By
continual self-instruction the people and their representatives
had been taught to look upon its construction largely as a war
measure, bound up with the great struggle for national unity.
The dear financial experience of the Rebellion was to accustom
the members of Congress to large expenditures of public means.
The same source had yielded an intense national sentiment.
Congress was soon to find itself so busy with weightier matters
that peace from the clamors of California and the Mississippi
valley for a transcontinental railway would be cheap at one hun-
dred millions of national credit. All that was left of the section-
alism and localism, that were the theme of the preceding chapter,
was the rivalry of the Saint Louis interest, the Eastern (or Chi-
cago) interest, and the Northern Pacific interest, which la^t had
developed since 1855. But Saint Louis was weak, even with
the support of the Baltimore, Philadelphia and New York lines of
railway, of which that city was the western terminus, and even
with the influence that it acquired from the traffic of the Missis-
sippi, Missouri, and Ohio Rivers. Missouri was a black sheep in
the flock of loyal states, and the inertness and inanity of slavery
7

98 THE UNION PACIFIC RAILWAY.

and Southern industrial ideas had left Saint Louis slow and back-
ward. Chicago, with the New England and New York energy
and wealth, and the traffic of the Great Lakes and of the systems
of east and west trunk railways behind it, was powerful. The
Chicago interest was identified with the political party of free-
dom in the North and received its support from the representa-.
tives of that party. There were two principal systems of east
and west transportation — one, of railways between Philadelphia
and New York on the east, and Saint Louis and Saint Joseph on
the west ; the other, of railways between New York and Boston
on the east and Chicago on the west, and of lakes and canals
between Canadian points, Portland, New York, Buffalo, Cleve-
land, and Detroit on the east, and Chicago, Milwaukee and
Duluth on the west. From Saint Louis, the first named system
had sought a connection with the future Pacific railway by the
Missouri Pacific railway from Saint Louis to Kansas City, and by
the Hannibal and Saint Joseph railway from the Mississippi due
west to Saint Joseph. The Chicago system had reached Dubuque,
Rock Island and Burlington, on the Mississippi, and the future
Chicago and Northwestern, Rock Island, and Burlington lines
were extending with all possible haste across Iowa to Sioux City,
Council Bluffs and Platte City (Plattsmouth). Further north,
Wisconsin, Minnesota, Oregon and the Territory of Washington
had been rapidly colonized by emigrants from the Old World
and settlers from the Eastern states. The superior fertility of the
soil of Dakota, Montana and Washington, as compared with that
of the "Great American Desert" in western Nebraska and Kan-
sas and the Great Basin between the mountain ranges — and the
consequent greater possibility of using a land grant to good pur-
pose — united with a far greater adaptability of land surface to rail-
way construction, gave to the extreme northern tier of rapidly
growing young states and territories a substantial basis for
demanding a transcontinental railway from Lake Superior or
Saint Paul on the east to the Columbia River or Puget's Sound
on the west. Asa Whitney's advocacy, followed by the revela-
tions of the government surveys of 1 853-1 855, had given to the

THE CHARTER. 99

Northern Pacific project substantial strength, when Josiah Per-
ham, in i860, originated the popular and attractive scheme
embodied in his People's Pacific Railroad Company, by which
the road was to be constructed with the proceeds of a grant of
government land and popular subscriptions of stock without the
aid of bonded indebtedness. This interest was active and aggres-
sive in 1861.

Thus it was that when the Thirty-seventh Congress came to
give serious attention to the details of a Pacific railway scheme,
under the new set of conditions imposed by the attempted seces-
sion of the South from the Union, it found three contending
influences, in favor, severally, of a Northern Pacific railway, a
Pacific railway from the border of Iowa, and a Pacific railway
from the border of Missouri.

Within a week after the opening of the special session, Curtis
(Iowa) introduced, July 8, 1 861, in the House of Representatives,
a bill substantially similar to the bill championed by him in the
preceding Congress and having the same title ; this represented,
the Chicago (or Eastern) interest. On this motion the bill was
referred, as usually, to a Select Committee of nine members. On
the 2 2d day of the same month, Washburne (Illinois) presented
a bill for " granting public lands and a loan of the Government
to the People's Pacific Railroad Company to aid in the construc-
tion of a railroad from the Mississippi River to the Pacific coast"
— the Northern Pacific project — which was referred to the same
committee. The Saint Louis project last received expression in
a bill offered by Rollins (Missouri), on February 5, 1862, and
intended " to aid in constructing a railroad and telegraph line
from the Missouri River to the Pacific Ocean, and to secure to
the government the use of the same for postal, military and other
purposes." This was tossed into the sieve of the Select Commit-
tee along with the other bills and the sifting began. Three
corresponding bills were introduced in the Senate, a Curtis bill
by Latham (California), July 17 ; a People's Pacific Railroad bill
by Morrill (Maine), July 25 ; and a prototype of the Rollins bill
by Pomeroy, (Kansas) February 4, 1862 ; and these were likewise

100 THE UNION PACIFIC RAILWAY.

referred to a Select Committee, originally of five, later of nine,
and finally of ten members.

Curtis had been made chairman of the Select Committee in the
House, but soon afterwards resigned his seat to assume active
military duties in the war, and the leadership of the " little legisla-
ture " was given over to Campbell (Pennsylvania). The commit-
tee reported to the House what its chairman described as the Curtis
bill, changed in some slight particulars to avoid technical objec-
tions, but members soon discovered in it a measure quite differ-
ent. The committee was timid and irresolute, inclined rather
to follow than to lead, and to reflect the opinion of the House
rather than to mold it. At first the Northern Pacific scheme had
been included in the bill, largely because the Senate had tacked
it to the Curtis bill in the last Congress, but when it was found
that a bill satisfactory to the two other interests could get votes
enough to pass without the assistance of the Northern Pacific
interest, that part of the bill was expunged, though it was thought
best to pacify Oregon with a branch line from the vicinity of
Sacramento. Then the committee reported the Rollins bill as a
substitute, and the efforts to perfect the substitute constituted
the active work of the House for the session.

Bancroft would have it believed that the Union Pacific Rail-
road Company was so named, not because it was created by the
national act of the Union, but because its work was to be accom-
plished by the union of several corporations.' Whatever be the
true origin of the name, some color is given to Bancroft's expla-
nation by the provisions of the Rollins bill. According to them,
the Leavenworth, Pawnee and Western (chartered by Kansas)
was to build a main line from Kansas City to the io2d meridian

' History of California, Volume VII., page 528. The historian does not
give his authority for this statement, and its correctness is to be doubted. The
managers of the company, of late years, have certainly assumed a different
origin of the name, as shown by their constant use of the Union shield as an
emblem, with its blue field and its thirteen red and white stripes, in every con-
ceivable place, from the side of a freight car to the letterheads of stationery.
Compare with this the name given by Senator Wilson to the projected railroad
on the route of the 32d parallel — the " disunion " line. (Supra, page 86, note.)

THE CHARTER. 10 1

(the western boundary of Kansas) and a branch line to it from
Leavenworth. Saint Joseph was to have a branch line to be con-
structed by the Hannibal and Saint Joseph (chartered by Mis-
souri). The Missouri Pacific (chartered by Missouri) might
connect at Kansas City. All three were empowered to unite in
constructing the branch lines. From Iowa, at points not farther
west than Kansas City, were to extend two branches to unite
with the main line in Kansas at not more than three hundred
miles west of Kansas City, to be constructed by four companies
(or any or either of them) — the (i) Dubuque and Sioux City, (2)
Cedar Rapids and Missouri, (3) Mississippi and Missouri, and
(4) Burlington and Missouri River (all chartered by Iowa). From
the io2d meridian through Colorado and Utah, the Union Pacific
Railroad Company was to build, " upon the most direct, central,
and piacticable route," to the Nevada border, thence the Nevada
Railroad Company (chartered by the Territory of Nevada) was to
pass it along to the California border, and the Central Pacific
Railroad Company of California was to complete the line to
Sacramento. Other companies chartered by California and
Oregon might construct a branch from the Central Pacific line to
the Columbia River. This was doubtless the " union " scheme
to which Bancroft refers. The land grant was to be five sections
per mile, and the bond subsidy was to be the same as finally pro-
vided', except for the Oregon branch, and for that it should not
exceed $8,000.00 per mile. After this "Joseph's coat of many
colors," or " crazy-quilt," as members described it, was modified
by doubling the land grant, lopping off the Oregon branch, and
providing that the Union Pacific company should build a branch
line from Iowa to unite with the Leavenworth, Pawnee and West-
ern on the io2d meridian, and should thence build westwardly
to the California border (thus rejecting the Nevada company),
the bill passed the House on the 6th of May, 1862, by a vote of
79 to 49. This left the Saint Louis party with an advantage,
though their battle had been fought by the Kansas representa-
tives, — Saint Louis was to have the direct or main line, and Chi-

' Infra, page 105.

102 THE UNION PACIFIC RAILWAY.

cago was to have a side or branch line, and the Kansas line
could by its western termination govern the course of the remain-
der of the line.

When the bill reached the Senate, it suffered the slovenly
championship of McDougall as chairman of the Senate com-
mittee, and would probably have been lost, had Latham not
come to the aid of his colleague. Practically nothing was done
for six weeks, when the bill was reported back to the Senate with
many amendments, most of them purely technical, but one of
them substantial and radical.

On the pretext that putting the point of union of the Iowa
and Missouri branches on the io2d meridian would make them
too long and expensive, Harlan (Iowa), who had been added as a
tenth member of the Select Committee, insisted that the junction
should be at or near Kearney, Nebraska, and the matter was
compromised by providing a point on the looth meridian. But
such a point of junction would cause a part of the line to be
built by the national corporation within a state, as the Kansas
company could not build outside of the state of Kansas. x\nd this
possible disregard of state rights encountered an old constitu-
tional scruple in the breasts of some "War Democrats" like
Lyman Trumbull, to conciliate which a further amendment was
agreed upon, so that the initial point was described as " a point
on the one-hundredth meridian of longitude west of Greenwich,
between the south margin of the valley of the Republican River,
and the north margin of the valley of the Platte River, in the
Territory of Nebraska." This was the important point, and the
contest in the Senate was focused on it, as its determination
would settle the question whether Chicago or Saint Louis should
have the main line and leave its rival the branch line. The bill,
with amendments, was passed by the Senate, June 20, 1862, by a
vote of 25 to 5.

If the House of Representatives should concur in the Senate
amendments, Chicago would have the advantage of the trunk
line, and Saint Louis (through Kansas City) and Saint Joseph
would have the branch line. Remarkably enough, the proposed

THE CHARTER. IO3

amendments were concurred in by the House of Representatives
without a syllable of debate, by a vote of 104 to 21, on the 24th
day of June, 1862. On the first of July following, the approval
of Abraham Lincoln made the bill a law, and nationalism had
won its first victory over sectionalism and localism.

The Act of 1862, afe finally passed and approved, created a cor-
poration to be known as "The Union Pacific Railroad Company,"
and to be composed of one hundred and fifty-eight persons named
in the act,* " together with five commissioners to be appointed by
the Secretary of the Interior, and all persons who shall or may be
associated with them, and their successors." The capital stock
was to consist of one hundred thousand shares of one thousand
dollars each, of which not more than two hundred shares were to
be held by any one person.' The one hundred and fifty-eight
persons, with the five more to be appointed by the Secretary of
the Interior, were constituted a " Board of Commissioners of the
Union Pacific Railroad and Telegraph Company" to set the cor-
poration in motion by opening books for the subscription of stock
in the principal cities of the United States, and by calling a meet-
ing of the stockholders for the election of directors as soon as two
thousand shares of stock had been subscribed and ten dollars per
share paid in ; when the directors had been elected and the prop-
erty of the corporation turned over to them by the board of com-
missioners, the duties of the. latter should cease and terminate, and
thereafter the stockholders should constitute the corporation.
The stockholders should have annual meetings and should make
by-laws, rules and regulations touching all matters appertaining
to the concerns of the company. The directors, to be elected by
the stockholders, were to be not less than thirteen in number, to

* These persons were distributed among the states and territories as follows:
New York, 24 ; California, 15 ; Pennsylvania, 13 ; Wisconsin, 9 ; Iowa, 8 ; Ohio,
Michigan, Illinois, Indiana, Minnesota and Kansas, 7 each ; Missouri, Massa-
chusetts and Nebraska, 5 each ; Rhode Island, Connecticut, Maine and Ver-
mont, 4 each ; Kentucky, Oregon and Maryland, 3 each ; New Jersey, New
Hampshire and Nevada, 2 each ; and Colorado, i. Total, 158.

'Amended by Act of 1864. Infra, page 126.

104 THE UNION PACIFIC RAILWAY.

be bona fide owners of at least five shares of stock each, to be
elected triennially, to elect a president and vice-president (from
their own number), and a secretary and treasurer, and to hold
office for three years; at the time of the election of the directors,
the President of the United States was to appoint two additional
directors, who should not be stockholders and who should hold
office for three years. The directors, president and vice-president
were to hold office for three years or such less time as should be
prescribed by the by-laws ; the secretary and treasurer, at the will
and pleasure of the directors.

The corporation thus created was "authorized and empowered
to lay out, locate, construct, furnish, maintain and enjoy a con-
tinuous railroad and telegraph, with the appurtenances, from a
point .... on the one hundredth meridian of longitude west
from Greenwich, between the south margin of the valley of the
Republican River and the north margin of the valley of the Platte
River, in the Territory of Nebraska, .... a point to be fixed by
the President of the United States, .... thence running west-
erly upon the most direct, central, and practicable route, through
the Territories of the United States to the western boundary of
the Territory of Nevada, there to meet and connect with the line
of the Central Pacific Railroad Company of California." The
main line and branches provided for in the act were to be " first-
class railroads, the rails and all the other irons used in the con-
struction and equipment .... to be American manufacture of
the best quality, .... the track .... of uniform width, ....
the grades and curves not [to] exceed the maximum grades and
curves of the Baltimore and Ohio Railroad, the whole .... to
be used for all purposes .... as one connected, continuous
line." The line from the " initial point " to the western bound-
ary of Nevada was required to be completed before July i,

1874.

A right of way through the public lands of two hundred feet
on each side of the track,' and the right to take from adjacent
public land earth, stone, timber and other materials for con-

* Modified by the Act of 1864, infra, page 126.

THE CHARTER. IO5

struction* were granted to the company. In addition was granted
a subsidy of " every alternate section of public land, designated by
odd numbers, to the amount of five alternate sections per mile on
each side of said railroad, on the line thereof and within the limits
often miles on each side of said road, not sold, reserved, or other-
wise disposed of by the United States, and to which a preemp-
tion or homestead claim may not have attached, at the time the
line of said road is definitely fixed ;** mineral lands were also
excepted from the grant, but where such lands contained timber,
the timber was granted.^ " And all such lands, so granted, ....
which shall not be sold or disposed of by said company within
three years after the road shall have been completed, shall be
subject to settlement and preemption, like other lands, at a price
not to exceed one dollar and twenty-five cents per acre, to be
paid to said company." For further aid, the Secretary of the
Treasury was to issue to the company thirty-year bonds of the
United States, bearing interest at six per cent per annum, payable
in United States treasury notes or any other legal tender, to the
amounts of $16,000.00 for each mile of railway and telegraph
east of the eastern base of the Rocky Mountains or west of the
western base of the Sierra Nevada Mountains, $48,000.00 for each
mile of one hundred and fifty miles west of the western base of
the Rocky Mountains, and of a like distance east of the western
base of the Sierra Nevada Mountains, and $32,000.00 for each
mile of the distance intervening between the two mountain spaces
of one hundred and fifty miles each.^ But the amount of bonds
issued for the main line should not exceed, in all, a total of
$50,000,000.00. The land grant was to be set apart, and the
bonds delivered, as fast as earned, upon the completion and
equipment (to be certified by three commissioners appointed by
the President of the United States) of sections of road and tele-
graph of forty miles each, where the bond subsidy was at the

' Limited by Act of 1864, infra, page 127.

"Amended by Act of 1864, infra, page 127.

3 The eastern and western bases of the Rocky Mountains and Sierra Nevada
Mountains respectively were to be fixed by the President of the United States.

I06 THE UNION PACIFIC RAILWAY.

rate of $16,000.00 per mile, and of twenty miles each where the
rate of the bond subsidy was in excess of $16,000.00 per mile.
On each installment of bonds issued on the lines east of the looth
meridian and west of the western base of the Sierra Nevada
Mountains, twenty-five per cent, and of each installment of
bonds earned on the remaining lines, fifteen per cent should be
reserved by the Secretary of the Treasury until all the lines pro-
vided for should be completed, and if any part of the system
should fail of completion within the time required by the act, all
the reserve bonds should be forfeited to the United States.'

The grant of land and bonds was " made upon condition that
said company shall pay said bonds at maturity, and shall keep
said railroad and telegraph line in repair and use, and shall at
all times transmit dispatches over said telegraph line, and trans-
port mails, troops, and munitions of war, supplies and public
stores upon said railroad for the government, whenever required
to do so by any department thereof, and that the government
shall at all times have the preference in the use of the same
for all purposes aforesaid (at fair and reasonable rates of com-
pensation, not to exceed the amounts paid by private parties for
the same kind of service ); and all compensation for services ren-
dered the government shall be applied to the payment of said

bonds and interest until the whole amount is fully paid,

and after said road is completed, until said bonds and interest
are paid, at least five per centum of the net earnings of said road
shall also be annually applied to the payment thereof."' " To

secure the payment of the amount of said bonds so

issued and delivered to said company, together with all interest
thereon which shall have been paid by the United States, the
issue of said bonds and delivery to the company shall ipso facto
constitute a first mortgage on the whole line of the railroad and
telegraph, together with the rolling-stock, fixtures, and property
of every kind and description, and in consideration of which said
bonds may be issued ; and on the refusal or failure of said

' Repealed by Act of 1864, infra, page 128.

* Act of 1862, section VI. Modified by Act of 1864, infra, page 128--129.

THE CHARTER. 10/

company to redeem said bonds, or any part of them, when
required to do so by the Secretary of the Treasury, in accordance
with the provisions of this act, the said road, with all the rights,
functions, immunities, and appurtenances thereunto belonging,
and also all lands granted to said company by the United States,
which at the time of said default shall remain in the ownership of
said company, may be taken possession of by the Secretary of the
Treasury, for the use and benefit of the United States."

The Central Pacific Railroad Company of California (a Cali-
fornia corporation), was authorized to construct a line " from the
Pacific coast, at or near San Francisco, or the navigable waters
of the Sacramento River, to the eastern boundary of California,"
to meet and connect with the Union Pacific, upon the same terms
and conditions as the latter corporation. If either the Union
Pacific or Central Pacific should reach the California boundary
before the other, either might proceed to a meeting with the
other, and the latter might even complete the branch lines to the
Missouri River, if they should be incomplete when reached.'

On the east, four branches, to be constructed on the same
terms as the Union Pacific and Central Pacific, were provided for.
(i) The Iowa branch was to be constructed by the Union Pacific
to join with the main line at the "initial point" on the looth
meridian, " from a point on the western boundar}' of the State of
Iowa, to be fixed by the President of the United States."* (2)
The Sioux City branch was to be built by the Union Pacific com-
pany from Sioux City (whenever there should be a line of rail-
way completed to that point through Minnesota or Iowa), so as
to connect with the Union Pacific main line or Iowa branch at
some point not further west than the looth meridian, to be fixed
by the President of the United States.^ Failure to construct and

'Infra, pages 148-149.

'See page 129, infra, for further information on the Iowa branch.

3 By the Act of 1864, (Section 17) the Union Pacific was relieved of the duty of
building the Sioux City branch, and the duty was shifted to such company, hav-
ing completed a line to Sioux City from the east or north, as should be desig-
nated by the President of the United States, with the proviso that such company

I08 THE UNION PACIFIC RAILWAY.

operate the Sioux City and Iowa branches as required was to
,-«ntait the forfeiture by the Union Pacific of all its rights under
the act cheating it. (3) The Missouri branch was to be con-
structed by the Leavenworth, Pawnee and Western Railroad Com-
pany (afterwards known as the Union Pacific Railway Company,
Eastern Division, and even later as the Kansas Pacific Railway
Company), from the mouth of the Kansas River and a connec-
tion with the Pacific Railroad of Missouri (now called the Missouri
Pacific, and having its main line from Saint Louis to Kansas
City) to the " initial point" of the Union Pacific on the looth
meridian in Nebraska.' (4) The Saint Joseph (or Atchison)
branch was to be an extension of the Hannibal and Saint Joseph
road from Saint Joseph via Atchison, to connect with the Kansas
line, or if rendered desirable by actual survey, from Saint Joseph
westward to some point on the Iowa branch or to the initial point
on the 1 00th meridian — but the Hannibal and Saint Joseph was
to receive subsidy land and bonds for only one hundred miles of
road. The Central Pqicific and Leavenworth, Pawnee and West-
ern, after their lines were finished, might unite with the Union

should receive no larger sum in subsidy bonds than the Union Pacific would
have received, if it had constructed the line. The Sioux City and Pacific Rail-
road Company was afterward designated by the President to build this branch,
and the result was the irregular line from Sioux City down the east side of the
Missouri River to Missouri Valley and thence west to Fremont, Nebraska.

* The Leavenworth, Pawnee and Western was also authorized by the Act of
1862 to connect its Kansas line (the Missouri branch) with Leavenworth by a
sub-branch. By the Act of 1864, it might either build through Leavenworth
from Kansas City or connect Leavenworth by a sub-branch from that point to a
point at or near Lawrence — but for the Leavenworth-Lawrence branch it should
receive no subsidy bonds. The Act of 1864 provided that any company author-
ized .... to construct its road and telegraph line from the Missouri River to
the "initial point "on the lOOth meridian, might "connect with the Union
Pacific at any point, westwardly of such initial point," but with no greater sub-
sidy of bonds than if it had constructed to the " initial point." The Union
Pacific Railway, Eastern Division (or Kansas Pacific) thereupon headed for
Denver, and the Act of March 3, 1869, provided that for the purpose of the
connection, the Denver Pacific Railway and Telegraph Company's line from
Denver to Cheyenne might be considered an extension of the Kansas Pacific, and
Cheyenne the junction point with the Union Pacific.

THE CHARTER. IO9

Pacific in building its lines, though the Iowa branch would have
to be finished before subsidy bonds could be issued for building
the main line. The Hannibal and Saint Joseph, Missouri Pacific,
and Union Pacific or either of them, might unite with the Leaven-
worth, Pawnee and Western in building the Missouri branch.

All of the companies named in the act, or two or more of
them, might be consolidated into one or more companies, with-
out loss of benefits under the act. If a continuous line from the
Missouri River to the navigable waters of the Sacramento River
should not be ready for use July i, 1876,* "the whole of said rail-
roads . . . together with all their furniture, fixtures, rolling-
stock, machine shops, lands, tenements, hereditaments, and
property of every kind and character, shall be forfeited to and
be taken possession of by the United States." ^Jf_ any of the
companies should fail to comply with the terms and conditions
of the act by not completing the main line and branches within
a reasonable time, or by not^keeping them in repair and use, but
should permit them to remain unfinished or out of repair or
unfit for use, Congress might pass an act to insure the speedy
completion of the lines, or put them in repair and use, and
direct their income to be devoted to the reimbursement of the
United States for the expenditures occasioned by the neglect and
default of the companies.

Instead of constructing new telegraph lines, the companies
might arrange with companies having existing overland lines of
telegraph to remove and transfer them along the lines of railway
to be operated in connection with them.

For the protection of the public and to insure future control
of the companies, it was provided, "That whenever it appears
that the net earnings of the entire road and telegraph, including
the amount allowed for services rendered for the United States,
after deducting all expenditures, including repairs and the
furnishing, running, and managing of said road, shall exceed
ten per cent upon its cost (exclusive of the five per centum to be
paid to the United States), Congress may reduce the rates of fare

'By the Act of 1864, the time was extended one year.

no THE UNION PACIFIC RAILWAY.

thereoii; if unreasonable in amount, and may fix and establish

the same by law. And the better to accomplish the object of this

act, namely, to promote the public interest and welfare by the

construction of said railroad and telegraph line, and keeping the

same in working order, and to secure to the government at all

I times (but particularly in time of war) the use and benefit of the

I same for postal, military, and other purposes^Congress may at

I any time, having due regard for the rights of §aid companies

\ named herein, add to, alter, amend, or repeal this act/' .

Each company was required to make an annual report to the
Secretary of the Treasury, containing the names and residences
of its stockholders, directors, and officers ; the amount of stock
subscribed, and the amount of it actually paid in ; a description
of the lines of road surveyed, of the lines fixed upon for the con-
struction of the road, and the cost of the survey ; the amounts of
revenue from passenger and freight traffic, and the expense of
the road and fixtures ; and an itemized statement of the com-
pany's indebtedness.' By the Act of June 25, 1868, the reports
were to be made to the Secretary of the Interior, and in addition
to the information required by the Act of 1862, were required
"all reports of engineers, superintendents and other officers who
make annual reports to any of . . . [the] companies."

II.

The bait offered by the act of 1862 was thrown to the shoals
of railway investors, nibbled at, and rejected. Something more
seductive was necessary to induce the patriotic but wary capital-
ists and railway contractors to "bite." The meeting of the
"Board of Commissioners " ' was held in Chicago in September,
1862, and the advantages and disadvantages of the recent act of
Congress were thoroughly considered, formally and informally,
by the commissioners and prominent " railroad men," capitalists,
and contractors in attendance ; the conclusion was that the
undertaking could not be made a success under the conditions

' 12 Statutes, 489.
* Supra, page 103.

THE CHARTER. Ill

imposed by Congress, and that " further inducements " were nec-
essary. When, therefore, the books were opened for subscrip-
tions of stock, it is no matter of wonder that the subscriptions
were not general, and that the few shares subscribed were not by
men having faith in the enterprise itself, but almost wholly by
men relying on further assistance from Congress, capitalists
who did not wish to prejudice future opportunities of gain by
** turning a cold shoulder " to the project in its infancy, and
patriotic men of smaller means, like Congressman Pruyn, who
subscribed for the laudable purpose of " saving the charter " by
effecting the preliminary organization required by law.

Senator McDougall was present at the meeting in Chicago,
and readily learned from the capitalists and others in attendance
that under the terms of the act of 1862 the Pacific railway could
not, or at least would not, be built. Accordingly, early in
the third (short) session of the Thirty-seventh Congress, he
took steps for additional legislation, with the view of extending
to prospective railway builders sufficient inducements to produce
a Pacific railway. On the 23d of December, 1862, he intro-
duced in the Senate a bill to amend the Act of 1862, and it was
referred on his motion to a Select Committee, of which he was
made chairman. After two months of incubation, the committee
hatched a report, February 23, 1863, in which the passage of
McDougall's bill was recommended. The bill had few provis-
ions. It provided, in order to make the subscription of stock
more popular and general, that the capital should be in one mil-
lion shares of one hundred dollars each, instead of one hundred
thousand shares of one thousand dollars each, and that the
directors should be owners of at least fifty, instead of five, shares
of stock.' The right of way, instead of extending two hundred
feet on each side of the railway track, was to extend one hundred
feet on each side, with additional ground when necessary, for
depots, turnouts, and other required structures. Adequate pro-
vision for the condemnation of private land for right of way sup-
plied the defects of the Act of 1862 in that regard. The provis-

' See supra, page 103; also infra, page 126.

112 THE UNION PACIFIC RAILWAY.

ion for the reservation of a percentage of the bonds until the
completion of the entire system of railways ' was to be modified
so that the bonds reserved should be delivered on the completion
of each continuous section of one hundred miles. If the main
line should not be located so as to pass through Denver,, the
Union Pacific was to be "authorized and empowered " to build a
branch line thither from the main line, and to receive therefor
the same subsidy per mile as for the main line. The assignment
of the Central Pacific to the Western Pacific and San Francisco
and San Jos^ companies of its line from Sacramento to San Fran-
cisco, via San Josd, was to be ratified and confirmed, the assignees
" to enjoy the same rights, privileges and benefits as if they had
been particularly named" in the Act of 1862. The modification
of the " bond reservation " provision was at first resisted
by Collamer (Vermont) and the conservative element in the
Senate, and defeated by a vote of 24 to 12; McDougall
offered a compromise amendment by which the provision
should not apply to the part of the line between the eastern
base of the Rocky Mountains and the western base of the
Sierra Nevada, and by which the bonds reserved on the rest
of the line should be delivered at the rate of one-fifth for
each continuous section of two hundred miles completed on
that part of the line; but even this was at first rejected by the
same conservative party, though later the opposition was with-
drawn and the compromise accepted. The Denver branch was
effectually disposed of by an amendment that the Union Pacific
should receive no subsidy of land or bonds for building it.
Senator Sherman offered an innocent looking amendment that if
the government saw fit, it might pay the Union Pacific money in
place of delivering bonds to it, which was readily adopted.
Pomeroy (Kansas), a most obsequious " friend " of Pacific railway
legislation, and particularly devoted to the policy of "adequate
inducements," suggested military despotism as a help-meet of
the Pacific railway, in an amendment that " the said company
is hereby authorized to enlist laborers for the construction of said

'Supra, page 106.

THE CHARTER. 113

road under a military' organization, with penalties for desertion or
default being stipulated in the printed articles of enlistment, and
to advance thereupon the cost of transporting said laborers to
the line of said railroad, which articles of enlistment and the for-
feitures and penalties stipulated therein, being first approved and
sanctioned as reasonable and just by the President of the United
States and the Attorney General of the United States, shall be
valid and binding on all parties, and shall be maintained and
enforced by the military forces of the United States." This
amendment, it need hardly be added, was speedily rejected. But
Pomeroy deserved more credit for having suggested an amend-
ment permitting the company to buy its rails abroad whenever
the price in the American market should exceed sixty dollars
per ton. But as the favor of the protectionists for the Pacific
railway had been purchased by the limitation of the supply of
rails to the " home market," their favor could be retained only
by maintaining the limitation, while the government loaned the
company money with which to buy the rails. The bill was passed
by the Senate February 25, 1863.

In the House of Representatives, on the 2d of March follow-
ing, Carhpbell tried to get it up for consideration, but Holman
(Indiana) raised the point that the Sherman clause made the bill an
appropriation bill, and it was, referred by the rules of the House,
to the Committee of the Whole, on the 3d of March, at the close
of the short session — parliamentarily throttled.

The Union Pacific has always been a source of discord and con-
tention. No feature of it has ever been brought before Congress
without precipitating a conflict of opposing interests. Even the
gauge of the track could not be determined without hours of
debate, persistent lobbying, and a full measure of political chi-
canery. The Act of 1862 provided (Section 12) that "the track
upon the entire line of railroad and branches shall be of uniform
width, to be determined by the President of the United States,
so that, when completed, cars can be run from the Missouri River
to the Pacific coast (!)" The modestly aspiring tone of the pro-

' The word "military" was afterwards changed to "voluntary."

114 THE UNION PACIFIC RAILWAY.

vision seems to contain no element of discord. But when Presi-
dent Lincoln's attention was called to his duty under the law
and the urgent necessity of his performing it, he intimated that
he would be glad to determine the gauge, if he knew what was
the best gauge; the Secretary of the Interior was called upon for
information, and having collected the opinions of engineers and
" railroad men " on the subject, laid them before the President
for his edification.

At that time American railways did not have a uniform
gauge. In England, a commission had been created by Par-
liament to determine and report on the best gauge for railways ;
after taking much testimony and giving full consideration to the
question, the commission had reported in favor of a gauge of

5 feet 3 inches. After much controversy, the Grand Trunk
Railway of Canada had adopted and was using a gauge of 5 feet

6 inches. The Erie, in New York, was using a gauge of 6 feet.
One railway in New England had a gauge of 7 feet. In Cali-
fornia, the law of the state had established a gauge of 5 feet. The
Missouri Pacific, the western connection of Saint Louis, had a
gauge of 5 feet 6 inches ; the Ohio and Mississippi, east of Saint
Louis, had the broad gauge of 6 feet. But the New York Cen-
tral, Michigan Central, Baltimore & Ohio, and all the Chicago
and Iowa railways used the " standard " gauge of 4 feet 2>%
inches.'

Lincoln was perplexed; Chicago wanted the standard gauge.
Saint Louis wanted the broad gauge, and California wanted the
gauge of 5 feet, and each interest had its representatives on
the ground. A full Cabinet meeting was held and the
matter was long and seriously discussed. At last, Lincoln set-
tled on the gauge of 5 feet, the California gauge, and made
an executive order accordingly. On the basis of the executive
order, the Central Pacific ordered a large amount of rolling

^ In building the Chicago & Northwestern from Chicago, William B.
Ogden had built forty miles on the gauge of six feet and had then changed the
gauge to the "standard," and relaid the rails. The managers of the Erie were
also considering the advisability of relaying their line on the " standard " gauge.

THE CHARTER. 115

Stock and machinery, to be constructed for use on a five-foot
track. But the New York-Chicago-Iowa combination was not to
be outdone. Harlan (Iowa) promptly introduced in the Senate a
bill " to establish the gauge of the Pacific railroad and branches,"
on the 24th of January, 1863 ; it was referred to the Select Com-
mittee on the Pacific Railroad, but the committee evidently could
not agree; for they later asked to be relieved from further con-
sideration of the bill, and it was taken up for general debate in
the Senate. McDougall argued vigorously for the California
gauge, and Harlan and Trumbull for the standard gauge, while
the broad gauge had its advocate in Fessenden. It was a day's
work to dispose of the bill, but on the 9th of February, 1863, a
vote of 26 to 9 sent it to the House of Representatives, there
to be passed without debate on the 2d of March, 1863. One
of the briefest laws in the statutes of the United States is : "Be
it enacted by the Senate and House of Representatives of the
United States, in Congress assembled, That the gauge of the
Pacific Railroad and its branches throughout their whole extent,
from the Pacific coast to the Missouri River, shall be, and hereby
is, established at four feet, eight and one-half inches." '

III.

When the third session of the Thirty-eighth Congress began
in December, 1863, the subject of the Pacific railway was
approached by the national law-makers with timidity and serious
apprehensions. The opinion was almost universal that additional
legislation was needed to make the Act of 1862 effective, but the
point where the limit of aid to patriotic capitalists should be set
was difficult to determine. The Act of 1862 had been carried to
shore by a tidal wave of national feeling. The power of the fed-
eral government had been so long restrained by state-rights and
strict construction statesmen that when secession suddenly
removed the pressure, there was a veritable explosion of national
power. But the feeling or consciousness of suddenly acquired
national energy spent itself to some extent in about two years,

' 12 Statutes, 807.

Il6 THE UNION PACIFIC RAILWAY.

and by the fall of 1863, a considerable opposition had arisen
against the vigorous prosecution of the war and other manifesta-
tions of the newly appreciated national strength, including the
Pacific railway. The vast expenditures of the war and the con-
sequent drain on the resources of the people, accompanied by
the odium of inquisitorial modes of taxation with which three
generations of Americans had been happily unfamiliar, had given
body and blood to a resistance that resulted in a serious impair-
ment of the Republican majority in Congress. Worst of all, the
shiftless management of the war and woefully misguided admin-
istration of the finances had placed the national government at
the mercy of a parasitical growth of army contractors, stodk job-
bers and speculators. No part of the public service was touched
that was not found infested with the vermin of political and
financial putridity. Congress was slow to approach the carcass
of the Pacific railway lest contact should reveal the odor of the
general corruption. In the national convention of the Republi-
can party in the spring of 1864, "immediate and efficient aid"
for the Pacific railway was not suggested,' and California had to
be contented with a bare " Resolved, That we are in favor of a
speedy construction of the railroad to the Pacific coast," while
the sprouting stump of the Democratic party found enough to do
in general condemnation of the war, without risking the expres-
sion of any sentiment on the Pacific railway.

Members of Congress only shared the current public sus-
picion that the Pacific railway project might prove to be only
another hiding place for a band of public plunderers. The elec-
tion of directors and other officers of the company at New York
in October, 1863, had been characterized by the reluctance and
even refusal of prominent and responsible public men to be
actively identified with the management of the company's affairs.
Only a few of the thirty prominent men elected directors were
actively interested, many were elected without their candidacy,

' Compare the attitude of the Republican party in the convention of 1864,
as differing from the attitude of the party in the conventions of 1856 and i860,
described on pages 72 and 96, supra.

THE CHARTER. 1 17

knowledge, or consent, and many declined to serve. General
John A. Dix, elected president, had not time, opportunity, or
inclination to give active personal attention to the duties of the
office, and the burden was practically transferred to the vice-
president, Thomas C. Durant. While no public spirited man or
set of men seemed inclined to take charge of the great project,
Washington was filled to overflowing with lobbyists and " inter-
ested parties," and even the gauge of the road could not be
determined without an invasion of patriotic " friends," who had
no apparent pecuniary interest in the matter, but chose such a
convenient occasion' to show their disinterested public spirit.
The several really reputable men who had subscribed stock to
"save the charter," respectfully declined to be identified with the
corporation except as well wishers. " Everybody's dog is nobody's
dog." But something had to be done. The Republican party
had gone too far to be able to recede in safety. The Pacific rail-
way had to be built, because an intense public sentiment
demanded it, and it had long been promised to the people. Pri-
vate parties would not build it with their own means. Moreover,
if the government was to have an intimate connection with the
construction of the railway, the connection must be made without
delay. The tide of public opposition to immense and unusually
wasteful expenditure of means, increased taxation, and incessant
** looting of the Treasury," was rising higher and higher each
day. The fear of a centralized government was obtaining firmer
hold on the public mind, and was daily finding louder and more
emphatic expression. But the Republican majority in Congress
resumed the task, though in fear and tremblijig, lest the burden
of the Pacific railway should prove as overwhelming as that of the
Cumberland Road and Bank of the United States had been for its
predecessor, the old Whig party. Shall we simply give more aid,
in the same way in which we gave it in 1862 ? Shall the govern-
ment not circumvent public plunderers by building the road
directly, instead of trying to filter its responsibility through a
corporation ? Shall we obtain a little doubtful relief by post-
poning the whole matter to the next session of Congress? These

Il8 THE UNION PACIFIC RAILWAY.

were the three questions that were answered by the Pacific rail-
way legislation of 1864.

On motion of Anthony (Rhode Island) the customary Select
Committee was superseded in the Senate by a standing " Com-
mittee on the Pacific Railroad," December 22, 1863; and Howard
(Michigan) was the first chairman of the new committee/ In
February, 1864, Sherman introduced a bill, of which he dis-
claimed being the originator, and which he said others had asked
him simply to present for the consideration of the Senate ; in
March, Conness (California) introduced a bill; and after deliber-
ating on the two bills, the committee ( to whom of course they
had been referred) reported, in May, 1864, the Sherman bill with
an amendment. In a later report of May 18, 1864, the committee
proposed, as a substitute for the Sherman bill, a bill in which the
act of 1862 was to be repealed, its main provisions retained and
digested, and two important changes made, (i) Instead of loan-
\ ing to the companies bonds, for the amount of which the gov

ernment was to have a lien on the companies' property, they were
to be allowed to issue their own bonds to the extent of $24,000.00
per mile for the lines east of the eastern base of the Rocky Moun-
tains, $96,000.00 per mile for the lines one hundred and fifty
miles westward from the eastern base of the Rocky Mountains
and one hundred and fifty miles eastward from the western base of
the Sierra Nevada, $48,000.00 per mile for the intervening line,
and $24,000.00 per mile for the California line (except for a space
of fifteen miles in the Contra Costa Mountains, where the rate was
to be $48,000.00 per mile). The bonds were to mature in thirty
years, bear interest at six per cent per annum, and be secured by a
mortgage or a deed of trust to be approved by the Secretary of the
Treasury and Attorney General. As rapidly as the lines should
be completed (in sections) and the fact of completion duly certi-
fied, the holders of the bonds might present them to the Secretary
of the Treasury and he would stamp upon them " The United States

^ In the House of Representatives, March 2, 1865, the customary Select
Committee was superseded, in a resolution to take effect at the close of the
session, by a standing " Committee on the Pacific Railroad."

THE CHARTER. Iig

hereby undertake and agree with the lawful holder of the within
bond to pay the first year's interest accruing thereon, as a gratuity
to the Union Pacific Railroad Company, the obligor; and to pay
the interest accruing thereon for the subsequent nineteen years,
immediately upon default of such payment by said obligor." (2)
The " initial point,'* instead of being " between the south margin
of the valley of the Republican River and the north margin of the
valley of the Platte River, in the Territory of Nebraska," was to
be "between the south margin of the valley of the Smoky Hill fork
of the Republican or Kansas River and the north margin of the
Platte River in Nebraska."' This change would give the Saint
Louis and Kansas party a chance to regain the ground they had
lost in 1862, but on the motion of Harlan (Iowa), by a vote of
17 to 15, the innovation was rejected and the original expression
of the act of 1862 was reinstated. A minor departure from the
Act of 1862 was found in the anti-monopoly provision limiting
individual holdings of stock to $500,000.00. The bill (being sub-
stantially identical with the Act of 1862, except as to the "guar-
anteed bonds " and " stock limitation " provisions) passed the
Senate by a vote of 23 to 5 on the 23d of May, 1864, after five
days of debate.

When the Senate bill reached the House of Representatives,
it found therie an independent bill already under discussion.
Price (Iowa) had introduced, March 16, 1864, a bill to amend
the Act of 1862 ; and that was made the basis of the work of the

' Note the interesting and important difference occasioned by the omission
in the second clause of the comma found in the first clause after " Platte River."
It cost the publishers of the Congressional Globe the expense of a column of
printing to reproduce the opinions of learned Senators on the effect of tne
punctuation, or omission of it. Part of the valley of the Republican River is in
Kansas. The presence of the comma required the initial point to be in Nebraska
— a territory ; the omission of the comma would permit the initial point to be in
Kansas — a state; and this " point " precipitated a heated discussion of the old
question of the power of the federal government to charter a corporation for
internal improvements within a state. Moreover, behind the discussion of the
constitutional question, the presence of the comma insured the advancement of
the Chicago interest ; the absence of it would permit the advancement of the
Saint Louis interest. The comma was restored.

120 THE UNION PACIFIC RAILWAY.

usual Select Committee of thirteen, of which Price himself was
chairman. After being reported back by the committee early in*
May, 1864, the bill was taken up by the House for consideration
at a night session on the i6th of June ; the provisions of the bill
were substantially those that ripened into law in the Act of
1864.

Holman (Indiana) began the opposition to the bill by propos-
ing an amendment, " That said road shall be a public highway,
and shall transport the property and troops of the United States,
which transportation thereof shall be required free of toll or other
charge." The debate that followed was, on the part of Holman,
a bitter denunciation of railway companies in general, and of the
" land grant roads,'* and Illinois Central and Union Pacific in
particular. If the general government should succeed in getting
from the Pacific railway free transportation of property and
troops, that, he intimated, would be all that it would ever get in
return for the immense aid to be given to it.

Two days afterwards, E. B. Washburne (Illinois) followed
Holman with an amendment to strike out the since celebrated
** Section X.," which provided that the government's lien for the
amount of bonds advanced to the companies should be inferior
and subject to the lien of holders of the companies' bonds to an
equal amount.^ Referring to Section X. in particular he pro-
claimed, " On my responsibility as a Representative, I pronounce
this as the most monstrous and flagrant attempt to overreach the
government and the people that can be found in all the legisla-
tive annals of the country." "" With general reference to the bill,
he complained "What is the present status of the company and
the government under the law? The company is organized. It
has its stockholders, its president, directors and officers. The
question of the good faith of its organization has been raised.
Has no one man more than the amount of stock limited by law,
that is, two hundred shares? Are all the directors owners, dona
fide, of the amount of stock required? On the other hand, is it

' Infra, page 138.

^ Congressional Globe ^ 38th Congress, first session, page 3152.

THE CHARTER. 121

not notorious that one singl^^ndividual owns or controls a
majority of the stock, and has organized the company in such a
way as completely to control it ; and is it not alleged that there
are directors in the board who are not bona fide owners of a
single dollar of stock? And it must be understood that under
the existing law, parties who have subscribed for $1,001,000.00
worth^f stock (the whole amount subscribed being only $2,000,-
000.00) can control the whole concern. While the government
is liable for $100,000,000.00, and has donated millions upon mil-
lions of acres of public land to this great work, yet this entire
organization has gone into the hands of parties who have put in
but a trifle over one per cent of the whole amount that the gov-
ernment is liable for. And the government is utterly without
any controlling voice in the direction of this company, as it has
but two directors out of the whole number. Does it not seem,
therefore, that the government is " left out in the cold " in the
arrangement as it now stands? But gentlemen point us to
the long list of the present board of directors who are men of
well known integrity and of capital ; but I desire to ask what
number of these men of integrity and capital who appear in the
list as directors are active and managing men, controlling and
directing the action of the company? Such directors as General

Dix, have either resigned their positions or

refused to take any part in the management of the affairs of the
company, while the real management is in the hands of a set of
Wall Street stock jobbers who are using this great engine for
their own private ends, regardless of what should be the great
object of the company or of the interests of the country. Who
are the men who are here to lobby this bill through? Have the
men of high character and of a national reputation, whose names
were, at an earlier period, connected with this enterprise, been
here, animated by a commendable public spirit and by motives
of patriotism, to ask us to pass this bill? I have not heard of
such men being here for that purpose, but on the other hand the
work of * putting the bill through,* has gone into the hands of
such men as Samuel Hallett and George Francis Train — -par

122 THE UNION PACIFIC RAILWAY.

nobile fratrum,^^^ Washburne's arraignment could be met only, as
it was met, by vigorous denials that the company was controlled
by one man, that the stockholders were actuated by evil motives,
or that stock-jobbers had gained an insidious influence over the
course of the enterprise. The Select Committee, it was urged,
was composed of honorable members (!) who had "spent six
months" in perfecting their report (!).

Then Pruyn (New York) who had himself, with others, been in-
strumental in " saving the charter " by subscribing stock and solic-
iting others to subscribe stock in the Union Pacific, sounded a
note of alarm from another quarter. Was it best that persons
who had contributed only $2,000,000.00 to a project universally
recognized and considered as a purely national project, should
have the management of sixty millions of government aid and of
millions of acres of public land, with almost no safeguards for
their economical and prudent Use? If the federal government
was to provide the means for building the road, would it not
be better for it to build the road than to turn the means
over to be handled by possibly irresponsible and dishonest
men? His amendment provided that " The President of the
United States shall, by and with the advice and consent of the
Senate, appoint a board of commissioners, to consist of seven
persons, who shall have and possess all powers now vested in the
Union Pacific Railroad Company under the act entitled * an act
. . . . approved July i, 1862,' and that said commissioners
shall proceed without delay to construct the said railroad and
telegraph line as authorized by the said act. The said commis-
sioners shall not be entitled to any compensation for their services;
but their necessary expenses, to be audited by the Secretary of
the Treasury, shall be paid to them respectively."'

The Holman amendment was defeated by a vote of 82 to 39
(61 not voting!). The Pruyn amendment received only 20 votes,
while 72 votes were against it. Then Pruyn, evidently anticipat-
ing the unfavorable vote, proposed two amendments more, the

' Congressional Globe^ 38th Congress, first session, page 315 !•
« Ibidem, page 3150.

THE CHARTER. 123

first providing for the appointment by the President of the
United States of three disinterested engineers to approve the
routes and termini selected by the companies, before they should
be established — rejected ; the second provided that before subsidy
bonds should be issued to the companies, all cpntracts made by
them for work and material should be approved by the Secretary
of the Treasury and Attorney General — rejected. An amend-
ment proposed by Wilson (Iowa) and agreed to, made the superior
lien of the first mortgage bondholders subject to the paramount
right of the government to the use of the lines of railway and
telegraph guaranteed by Section VI. of the Act of 1862.'

An agreeable amendment for which Dawes (Massachusetts) was
responsible, allowed the pestiferous branch lines, or any of them,
to connect with the Union Pacific west of the initial point (but
without increase of subsidy) if " more practicable or desirable.'* '^
Lest the Kansas line should first reach the initial point and con-
tinue the construction westward, thus making Kansas City (or
Saint Louis) the principal eastern terminus, to the detriment of
Chicago (and Iowa), an amendment urged by Allison (Iowa) pro-
vided "That no bonds shall be issued or land certified by the
United States to any person or company for the construction of
any part of the main trunk line of said railroad west of the one
hundredth meridian of longitude and east of the Rocky Moun-
tains, until said road shall be completed from or near Omaha, on
the Missouri River, to the said one hundredth meridian of longi-
tude."

A motion by Washburne to postpone the further consideration
of the bill to sthe next session of Congress was speedily voted
down, and motions to adjourn by Holman shared the same fate.
Then the bill was passed by a vote of 70 to 38 (74 not voting),
Pruyn, with excessive delicacy, declining to vote because he was
a stockholder in the Union Pacific !

The bill passed by the Senate had reached the House while
the House bill was under consideration, and had been referred by

'Section VI. of the Act of 1862 is quoted in full on page 106, supra.
"Supra, pages 107-109

124 THE UNION PACIFIC RAILWAY.

the House to the Select Committee, which, by some peculiar rule of
procedure, could not, it was said, be reported back to the House
because the committee would not be caUed again during the ses-
sion ; more probably its provisions were not agreeable to the
" friends" of the Pacific railway in the House, and if reported back,
it might have interfered with their plans. When the House bill
reached the Senate, and was referred, the Senate committee tartly
reported it back with an amendment in the nature of a substitute,
the proposed substitute being the Senate bill already passed. Of
course the House would not concur in the Senate amendment and
the Senate insisted on its own measure ; the consequence was an
inevitable Committee of Conference, of which Senators Harlan,
Foster and Conness, and Representatives Stevens, Cole and
McClurg were the members. The report of the " Little Congress "
acceded to the demands of the House on the question of bonded
aid, while the only important concession to the Senate was the
refusal to the Kansas branch of a bond subsidy for constructing
the Leavenworth branch ; the House bill had ratified the assign-
ment by the Central Pacific to the Western Pacific of its line from
Sacramento to San Jos^ ; the Senate bill had raised a new cor-
poration for the construction of the line ; the committee of con-
ference struck out both provisions.' The report of the commit-
tee was immediately accepted by both Houses, without being
printed or read, and with only a meagre verbal description by a
member of the committee in each House on the last day of the
session. The approval of Lincoln on the 2d of July, 1864,
completed (with the exception of a few minor provisions after-
wards added) the charter of the Union Pacific Railroad Company.
The opponents of Pacific railway legislation afterwards com-

» The Pacific nulwa)*s have usually got what they have wanted, soon or late,
and in the next session of Congress, the national legislature passed an act of
which one provision was, ** That the assignment made by the Central Pacific
. . , to the Western Pacific ... of the right to construct all that por-
tion of said railroad and telegraph from the city of San Jos^ to the city of Sac-
ramento is hereby ratified and confirmed . . . with all the privileges and
benefits of the several acts of Congress relating thereto, and subject to all the
conditions thereof."

THE CHARTER. 1 25

plained bitterly of the influence exerted by the lobby on the occa-
sion of the discussion of the bill of 1864 in the Hpuse, and of the
undue haste with which the measure was pushed through. The
night session, on the 21st of June, 1864, was afterwards described
by E. B. Washburne as follows : ** The consideration of the bill
was again resumed in the evening session of June 21, and no
gentleman who was here at that time will ever forget the extra-
ordinary scene which was presented. The lobby mustered in its
full force. I say nothing here of the shameful means which it
was alleged were used in a ' confidential way ' to carry through
this bill ; but I do say that the scene was one of the most
exciting that I have ever witnessed in a service of nearly
sixteen years. The galleries were packed with people inter-
ested in the measure, by lobbyists, male and female, and by
shysters and adventurers hoping for something to *turn up.'
Your gilded corridors were filled with lobbyists, who broke
through all rules and made their way upon the floor and into the
seats of members." ' The same vigorous champion of the oppo-
sition has put on record a true description of the proceedings of
the House on the reception of the report of the Committee of
Conference in these words : "On the ist of July, the committee
of conference reported, bringing in such new matter as would, in
my opinion, be a violation of every rule which governs commit-
tees of conference in legislative bodies. . . . And this
report, changing so materially the bill as acted on by the House
and Senate, was gagged through ; the opponents of the measure
were not permitted to have it pVinted and postponed, so that they
could see what it was. I struggled in vain for the printing
of the report and for its delay until the members of the House
could have an opportunity of reading it ; but the gentleman from
Pennsylvania (Thad Stevens) demanded the previous question,
which was seconded and the main question ordered to be put ;
and it would seem incredible that in a matter of legislation
involving interests so vast and pledging amounts of money so

* Congressional Globe^ 40th Congress, 2d Session, page 2135, March 26,
1868.

126 THE UNION PACIFIC RAILWAY.

enormous, even the yeas and nays were refused ; that even tellers
were refused. . . . Thus ends the story of the action of the
House touching this extraordinary legislation, which will go down
into the history of this country."'

The Act of 1864 provided an adequate procedure for the
condemnation of private property for right of way, the necessity
of which had been entirely overlooked in the Act of 1862. But
in such cases the right of way was to be only one hundred feet
on each side of the track, unless more should be needed for
excavations or embankments, or depots and other structures.'

The shares of the capital stock of the Union Pacific were
reduced from one thousand dollars to one hundred dollars each,
and the number of shares increased from one hundred thousand
to one million f the limitation of individual holdings of stock
was removed.* Subscription books were to be kept open until the
entire capital should be subscribed, and the capital stock should
not be increased "beyond the actual cost" of the road ; assess-
ments on stockholders, payable in money only, of not less than five
dollars per share, and at least as often as every six months, should
be made until the par value of all shares should be fully paid.
The general office of the company was fixed by implication at
New York.5 The directors elected by the stockholders should be
holders of fifty, instead of five shares of stock, and were to be
fifteen, instead of " not less than thirteen," in number ; their

' Congressional Globe^ 40th Congress, 2d Session, pages 2136- 2137, March
26, 1868. See infra, pages 148-149, for a statement of the serious charge made
by Senator Conness that the report of the committee of conference or bill was
tampered with.

» Compare the right of way granted through the public lands by the Act of
1862, supra, page 104.

3 Supra, pages 103 and in.

* Supra, page 103.

5 Afterwards, by the Act of 1869, when vexatious litigation and disputes of
factions in the company made New York inconvenient for the purposes of a
general office, the stockholders were permitted " to establish their general office
at such place in the United States as they may select." The general office has
since been in Boston.

THE CHARTER. 1 27

term of office was limited to one year.' The government direc-
tors were increased in number from two to five, of whom at least
one should be a member of each standing and special committee
of the board of directors, and who were required to " visit all
portions of the line" " as often as may be necessary to a full
knowledge of the condition and management" of it, and to make
reports to the Secretary of the Interior, from time to time, when
called upon by him to do so.

The time for the completion of the roads was extended one
year, and the Central Pacific was limited to one hundred and fifty
miles of road east of the California border.' " The failure of -any
one company to comply fully with the conditions and require-
ments [of the Acts of 1862 and 1864] shall not work a forfeiture
of the rights, privileges, or franchise of any other company . . .
that shall have complied with [them]." ^

The land grant was increased from five to ten odd-numbered
sections on each side of the road and within twenty miles of it.^
Mineral lands (excepted from the grant of 1862) should not
include coal and iron lands. "Any lands granted by [the Acts of
1862 and 1864] shall not defeat or impair any preemption, home-
stead, swamp land, or other lawful claim, nor include any govern-
ment reservation or mineral lands, or the improvements of any
bona fide settler, or any lands returned and denominated as min-
eral lands, and the timber necessary to support his said improve-
ments as a miner or agriculturist ; " " the quantity thus exempted
.... shall not exceed one hundred and sixty acres for each set-
tler who claims as an agriculturist, and such quantity for each
settler who claims as a miner as the .... Commissioner [of the
General Land Office] may establish by general regulation." The
grant of timber on mineral lands should not extend beyond ten
miles on each side of the road.

'Supra, pages 103-104.

' See infra, pages 148-149, for a more detailed statement of the "one hund-
red and fifty miles " question.

3 See page 109, supra.

* Compare page 105, supra.

128 THE UNION PACIFIC RAILWAY.

' The reservation of bonds on each completed section of road
was withdrawn." A proportion of the [subsidy] . . . bonds, not
exceeding two-thirds of the amount . . . authorized to be issued
[and not] exceeding two- thirds of the value of the work done/'
should be delivered to the companies upon the certified comple-
tion of " a certain proportion of the work required to prepare the
road for the superstructure on any [and each] section of twenty
miles" between the eastern base of the Rocky Mountains and the
western base of the Sierra Nevada, "the remaining one-third
to remain until [each] section is fully completed and cer-
tified by the commissioners," but no such advance of bonds
should be made to the Union Pacific for work west of Salt Lake
and more than three hundred miles beyond the completed con-
tinuous line from the ** initial point." Again, the companies
might each, " on the completion of each section of [twenty miles]
of road,' issue their first-mortgage bonds on their respective rail-
road and telegraph lines to an amount not exceeding the amount
of the bonds of the United States, and of even tenor and date,
time of maturity,' rate and character of interest with the bonds
authorized to be issued to said railroad companies respectively.
And the lien of the United States bonds shall be subordinate to
that of the bonds of any or either of said companies hereby auth-
orized to be issued on their respective roads, property and equip-
ments, except as to the provision of the sixth section of the Act
[of 1862] relating to the transmission of dispatches and the trans-
portation of mails, troops, munitions of war, supplies, and publid
stores for the Government of the United States." ^ The govern-
ment bonds were also to be delivered on the certified completion
of each section of twenty mstead of (in some places) forty miles.*

' See page 106, supra.

'^Even this provision was amended by the Act of March 3, 1865, so that,
instead of waiting for the completion of each section, each company might
" issue .... bonds to the extent of one hundred miles in advance of a contin-
uous completed line of construction."

3 Section VI. of the Act of 1862 is quoted in full on page 106, supra. See
also page 123, supra.

* See pages 105-106,. supra.

THE CHARTER. 129

" Only one-half [instead of <?//] ' the compensation for services
rendered for the government by [the] companies [should] be
required to be applied to the payment of the bonds issued by the
government in aid of the construction of [the] roads."

The amendatory provisions of the Act of 1864, as affecting
the several branches of the Pacific railway, have been considered
in a more convenient place.' When the Union Pacific Railway,
Eastern Division,^ should reach the "initial point" on the looth
meridian, if the Union Pacific should not be "proceeding in
good faith to build" its road through the territories, it might
proceed westward on the same line to a connection with the
Central Pacific, with the proviso, however, that it should receive
no bonds or land until the Iowa (or Omaha) branch had been
completed.* The Burlington and Missouri River Railroad Com-
pany was authorized to extend its line from its Missouri River
terminus (near the mouth of the Platte River) through the terri-
tory of Nebraska to a connection with the Union Pacific at a
point not west of the looth meridian; as aid were granted the
right of way and odd-numbered sections of public land (not dis-
posed of and not mineral land) within ten miles on each side of
the road, but no government bonds were granted.

Congressional control in the future was intended to be pre-
served by a final provision "That Congress may, at any time,
alter, amend, or repeal this act."^

IV.

The legislation that constitutes the Union Pacific charter is
readily recognized by the student as unique and significant in
American history. The first and second Banks of the United
States had been imposed on the people by the government ; the

* See page 106, supra.

'See pages 107-109, supra.

3 Earlier called the Leavenworth, Pawnee and Western, and later the Kan-
sas Pacific.

^See page 107, supra.

S13 Statutes, 356.

130 THE UNION PACIFIC RAILWAY.

Union Pacific was imposed on the government by the people.
The Cumberland Road brought into exercise such powers of the
national government that the states were alarmed for their own
powers, and the national government eventually ceded that strife-
stirring highway to the separate states through which it passed ;
butihe argument that the Pacific railway was " a national under-
taking for national purposes" has been regarded even by the
Supreme Court of the United States without disapproval/
although the national importance of connecting the Potomac and
Ohio differs from the national importance of connecting the
Missouri and Pacific only in degree of intensity. In the minds
of the people, the expenditure of national means on the Cumber-
land Road was not justified by its necessity for postal and mili-
tary purposes, but the same speculative necessity afforded a
readily accepted excuse for an unprecedented loan of national
means to the Pacific railway and its branches. Monroe labored
acutely in his celebrated message vetoing an appropriation for
the Cumberland Road to demonstrate the unconstitutionality of
the expenditure of national revenue within the limits of the
states, even with their consent ; Jackson held that the national
government might expend its means on roads within the several
states When they were of national importance, and the Maysville
Road bill met his veto because he did not consider a road
through a part of Kentucky a national necessity ; but Lincoln
was one of the most ardent promoters of legislation to grant land
and loan bonds to Pacific railway companies in Kansas and
California. Lewis Cass and his "old school*' of Democrats
denounced, in 1850, the creation of federal corporations for
internal improvements within the states, but the Republican
statesmen of the sixth decade did not hesitate to endow the
Union Pacific with corporate power to extend its lines through
Kansas and California. When DeWitt Clinton wanted federal
aid in the construction of the Erie Canal, his presumption was
derided. When Huntington and Durant wanted the credit of
the federal government as a basis for the construction of the

'United States vs. The Union Pacific Railroad Company, 91 U. S. R. 79.

THE CHARTER. I3I

Pacific railway, the only serious question was as to the extent of
the assistance to be given.

The steps in the constitutional advance are not difficult to
trace. In the first place, the people wanted roads, canals, and
railways, as their industrial growth made them necessary. How
was the want to be supplied? The national government attempted
to supply the want by directly building the roads or some of
them, but the political mind of the people had not been " edu-
cated up " to the level of such an exercise of national powers, and
as yet the people had not acquired the strength of conscious
united industrial effort, now exerted through corporations and
associations that threaten to absorb the individual and destroy his
autonomy ; the united effort had to be put forth through some
agency, and the states were the-only agencies that the people had
learned to regard as embodying their collective energy. The
state was near to the individual, and the nation was far from
him ; the nation was regarded by the states as a creature com-
posed of the contributions by them of slices of their sovereign
powers, and if the nation was possessed of an immense public
domain, it was considered as holding it largely as a trustee for
the separate states for whom it was at least inconvenient to hold
property in common. Individual men, in casting about for a con-
venient instrument with which to exercise collective industrial
effort in creating means of intercommunication among the people,
found in existence and fully organized, the instrument through
which they exercised their collective political power, the state.
Nothing, therefore, was more natural for the man of 1825- 1840 than
to expect New York to dig the Erie Canal, Michigan to build the
Michigan Central railway, or Pennsylvania to build the Pennsyl-
vania railway. But the states were not always in possession of
the means with which to satisfy the desires of the people to exert
for them their collective industrial efforts ; they had, however, as
they considered, a deposit of public domain in the hands of their
trustee, the nation ; accordingly, when the people of Illinois
wanted a railway, the state of Illinois drew on its national deposit
of public land and turned the proceeds over to the people to be

132 THE UNION PACIFIC RAILWAY.

used in satisfying their desire. If, for a time, the people used
their political instrument for industrial purposes, they soon found
that it was unwieldy and that it was lacking in sufficiently direct
responsibility for results and practically uncontrollable ; the cor-
poration grew into use as a more handy and effective industrial
implement, to which the state — the people politically organized
— very willingly delegated most of the active industrial attributes
which the people in their rapid growth and development of new
social wants had temporarily attached to it. The next step, then,
was for New York to donate the Erie Canal to the people, and
for Michigan and Pennsylvania to sell their lines cf railway to
corporations,' as being more fit instruments for the accomplish-
ment by the people of their industrial purposes. The man that
has a check cashed at a bank holds the banker in higher relative
estimation than he holds the man who gave him the check ; like-
wise the industrial corporation which received a grant of land
to aid in building a railway learned to elevate the nation that held
the deposit of land above the state through which the corporation
received the benefit of the deposit ; as a consequence, the cor-
poration aspired to more intimate relations with the banker
nation. Next the corporation — the people in industrial collectiv-
ity — made bold to ask aid of the nation directly, without the
intermediation of the state, — the day of the lobby had come. It
was only a short step from asking a grant of public land to asking
for a public loan of credit. The final step was taken when the
nation itself (not the state) created a corporation, and not only
endowed it with the land grant that it had become accustomed to
give to the states whenever they had applied for it, but even
essayed to reach beyond its final step and loaned its credit to its
creature for the accomplishment of the purpose of its creation ;
at the same time, the nation granted land and loaned credit to

* It is considered significant that the Erie Canal was completed, while the
railways were incomplete ; it is not so difficult for the state to manage and control
an industrial mechanism after it is constructed, but in undertaking its construc-
tion, the state has always encountered serious trouble ; if the Erie Canal had
been only partly constructed, the state of New York might have been expected
to turn it over to a corporation.

THE CHARTER. 133

corporations created by the states, and even gave power to its own
created corporation to exercise its energies within the limits of
the states. The most remarkable feature of the history of the
United States is the growth of a nation from a loose combination
of states. Between the nether millstone of the nation and the
upper millstone of the municipalities, the states are being ground
** exceeding small." The significance of the Pacific railway legis-
lation is that it marks the high-water level of the flood of national
power ; it is part of the drift, along with high protection, recon-
struction, river and harbor bills, and oleomargarine inspection
laws, that was left at the highest point on the shore, when the
flood of nationality receded.

If the charter of the Union Pacific and the bonds in aid of it
and the other parts of the Pacific railway had not been granted at
the particular time of the Rebellion, it Is* safe to say that they never
would have been granted at all. Yet the acts of 1862 and 1864
were not " war measures," unless the expression be used with
material qualifications. All the systems of transcontinental rail-
ways, of which there are now several, had their origin, first, in
an economic need of communication between western Europe
and eastern Asia; then, of communication between the Mississippi
valley and the Pacific coast; and finally, of communication as a
means of developing the intervening country and its resources.
All railways and nearly all other instruments of industry are of
undoubted value to a nation in time of war ; the Pacific railway
was expected to be valuable to the United States in controlling
the western Indians and possibly in defending California against
the attacks of foreign sympathizers with the South, but the inspir-
ation of the Acts of 1862 and 1864 was rather in the general
industrial need of communication, the incessant demands of Cal-
ifornia for it (because the people of that state wanted to be a part
of the nation in fact as well as in name), and in the desire of national
unity, itself deeper than the causes of the Rebellion, and the
essence of all that is valuable in the federal constitution. The
Pacific railway, in the nature of existing industrial conditions, one
would have expected to be built by individuals, either alone or in

134 THE UNION PACIFIC RAILWAY.

some form of association or incorporation; but railways had come
to be regarded as exceptions to the general rule, and instead of
being built in response to the demand of a developed community,
were built to create the demand and in anticipation of it ; the ex-
aggeration of the public function of railways and their intimate
association with the settlement of the public domain had made
land grants to railways common, and apparently very proper. In
the case of the Pacific railway the situation was peculiar, in that
widely separated communities were already sufficiently developed
to create the demand for railways, while the intervening public
domain was considered as of no value, and presented apparently
unsurmountable obstacles to railway construction ; moreover, the
railway would be almost entirely in the territories of the United
States, and could not be constructed under the patronage and
control of states, as had been the case with most prior land grant
railways. Financial aid would have been extended to a Pacific
railway project long before 1862, if it had not been for local and
sectional prejudices and jealousies ; the Rebellion (and conse-
quent resignation by Southern members of their seats in Con-
gress) simply removed the pressure to some extent, though
enough of it was left to provide for the miserable Missouri River
branches and to give a charter to the Northern Pacific Railroad
Company on the same day in 1864 on which the Union Pacific
charter was perfected. As soon as the war was over, and even
before reconstruction had been perfected, Congress was deluged
.with applications for aid in government bonds or guaranties of
interest on railway bonds for the construction of a Pacific rail-
way on the 32d parallel, an international line from Cairo to Mex-
ico, a Southern branch of the Pacific railway from Kansas to the
Gulf of Mexico, and a flood of other like projects, but such of the
applications as received serious attention were honored only by
grants of public land. Congress insisted that the granting of
aid in bonds and financial credit had not become the settled
policy of the government, and that the case of the Union Central
Pacific railway had been made an exception to the general rule.
The very desire of national unity that gave strength to the pur-

THE CHARTER. 135

pose of putting down the Rebellion gave body to the purpose of
securing a Pacific railway — the source of one was the source of
the other. The Pacific railway was not built (under a "war
measure ") for the purpose of assisting to put down the Rebellion ;
the conditions brought into being by the Rebellion simply
permitted what had been long desired and often essayed — gov-
ernment aid for the Pacific railway.

CHAPTER V.

DONE!

Writers and public speakers of every class have well-nigh
exhausted their resources of expression in detailing the attributes
of the Pacific railway project, its promotion, accomplishment and
effects. The modest writer of the Emigrant article was content
with describing it as " one of those great projects which none
but a great nation could effect,*' and its consequence to make
the United States " the first nation in the world." Asa Whit-
ney, more enthusiastic, assured his readers in 1845, "You will
see that it will change the whole world . . . [and] bring [it]
together as one nation, allow us to traverse the globe in thirty
days, civilize and christianize mankind, and place us in the cen-
ter of the world, compelling Europe on one side and Asia and
Africa on the other to pass through us." When John A. Dey
left the position of chief engineer of the Union Pacific, he regret-
ted that he was resigning " the best position in [his] profession
this country has offered to any man." Thomas H. Benton pas-
sionately pleaded that the great line "be adorned with its crown-
ing honor, the colossal statue of the great Columbus, whose
design it accomplishes, hewn from the granite mass of a peak of
the Rocky Mountains, overlooking the road, the mountain itself
the pedestal, and the statue a part of the mountain, pointing with
outstretched arm to the western horizon, and saying to the flying
passenger, * There is the East! There is India!*"' The con-
gressional orator has not considered himself justified in address-
ing his fellow members (or his constituents) on the subject of a
Pacific railway without crowning his effort with a fulsome pero-

' Speech in Saint Louis, October, 1849, before a National Pacific Railroad
Convention.

136

DONE! 137

ration on the greatness and grandeur of the project. Senator
Butler (South Carolina) once complained, " It was said of the Nile
that it was a god, I think that this Pacific railroad project comes
nearer being the subject of deification than anything else 1 have
ever heard of in the Senate. Every one is trying to show his
zeal in worshiping this great road." ' Charles Sumner, greatest
scholar of them all, when invited in 1853 to attend the celebra-
tion of Independence-day in Boston, profusely apologized in a
letter to the mayor of the city for his inability to attend, and
added, " The day itself comes full of quickening suggestions,
which can need no prompting from me. And yet, with your per-
mission, I would gladly endeavor to associate at this time one
special aspiration with the general gladness. Allow me to pro-
pose the following toast : *The railroad from the Atlantic to the
Pacific — traversing a whole continent and binding together two
oceans, this mighty thoroughfare, when completed, will mark an
epoch of human progress second only to that of our Declaration
of Independence. May the day soon come!*"' The favorite
rhetorical figure of the Pacific railway orator was a comparison
of his theme with the Seven Wonders of the ancient world, and a
declaration, not admitting of contradiction, that they "dwindled
into insignificance" in the comparison. ^

The project was thoroughly saturated and fairly dripping
with the elements of adventure and romance. Before the build-
ing of the Pacific railway, most of the wide expanse of territory
west of the Missouri was terra incognita to the mass of Americans.
The interest of Thomas Jefferson in the new national purchase
of Louisiana had inspired the " novel and arduous undertaking"
of Lewis and Clarke in 1804, 1805 and 1806, and the tales of

^Congressional Globe, 33d Congress, 2d Session, page 351.

'Letter to Hon. Benjamin Seaver, Mayor, etc. Works of Charles Sumner,
Vol. III., page 228.

3 Senator Rusk (Texas) in a letter to the Philadelphia Railroad Conven-
tion, in 1850, referred to the Pacific railway as the " Colossus of Rhodes ^^ and
another dignified Senator, with less originality, afterwards referred to it in
debate as the " Colossus of Rail- Rhodes'^

138 THE UNION PACIFIC RAILWAY.

bears, snakes and buffaloes, and descriptions of weird Indian
customs compiled in their reports had excited the curiosity of
many readers. The trappers and fur traders of the Northwest
had brought back from the wilderness, at long intervals, a mass
of astonishing information of the fierce savages, strange ani-
mals and peculiar vegetation of Oregon and the mountains. The
widely circulated reports of Fremont's three explorations, and of
the dangers and perils of the mountains and desert West, had
made the Pathfinder a hero and a presidential candidate. The
" Pacific Railroad Surveys " from 1853 to 1855' added to the
fund of popular information, and as each succeeding volume left
the hands of the public printer, with its wealth of illustration and
description, the naturally keen Anglo-Saxon appetite for adven-
ture and acquisition was only whetted the sharper. Stansbury,
Bonneville, Pike, and Long came later, with more particular in-
formation of the central West. The acquisition of California and
Texas served only to heighten the ardor of the people to explore
the " Great West." The discovery of the precious yellow dust
in California hung up before the imagination of the ** Argonauts
of '49 " a golden fleece that stimulated thousands of them to
the privations of " prairie schooner " voyages. And the later
discovery of the baser but equally valuable metals in Nevada and
Colorado, in i860 and 1861, swelled the ranks of the wealth
Crusaders. The " Mormon Rebellion," and the periodical out-
breaks of the western Indians, followed by the Civil War and
the impending loss to the Union of the Pacific coast territory,
made the Pacific railway, in the minds of most men, a national
military necessity, and made its projectors and builders heroes
of the first order.

The inducements offered by the act of 1862 were insufficient
to attract to the Union Pacific individual capitalists anxious to
display industrial heroism and save the nation (!), but doubling
the amount of the prizes by the amendments of 1864 had the
desired effect, and a beginning was made by the completion of
eleven miles of the Union Pacific by the 25th of September,

'Supra, pages 59-60.

DONE! 139

1865, and of forty miles by the end of the year 1865. On
October 5, 1866, the mileage had increased to two hundred and
forty-seven miles. By January i, 1867, the road was finished
and operated to a point three hundred and five miles west from
Omaha. In 1867, two hundred and forty miles were built. The
year 1868 produced four hundred and twenty-five miles; and
the first four months of 1869 added the one hundred and twenty-
five miles necessary to complete the road to its junction with the
Central Pacific at Promontory Point. Work on the Central
Pacific had been commenced at Sacramento more than a year
before work had been begun on the Union Pacific at Omaha,
and by the time the first eleven miles of the latter had been
completed, the former had attained a length of fifty-six miles,
increased by January i, 1867, to ninety-four miles. In 1867,
forty-six miles were built ; in 1868, three hundred and sixty-
three miles were added ; in 1869, the remaining one hundred
and eighty-six miles were covered, and Promontory Point was
reached. The Union Pacific had built one thousand and eighty-
six miles from Omaha ; the Central Pacific had built six hundred
and eighty-nine miles from Sacramento.

The natural obstacles presented by the mountains and desert
land, the absence of timber on the prairies, of water in the moun-
tains, and of both in the alkali desert, had made the work excep-
tionally difficult and expensive. The Central Pacific, though
under the necessity of getting its iron, finished supplies, and
machinery by sea, via Cape Horn or Panama, had the advantage
of Chinese coolie labor and the unified management of its con-
struction company ; while the Union Pacific, having no railway
connection until January, 1867, was subjected to the hardship of
getting its supplies overland from the termini of the Iowa rail-
ways or by Missouri River boats, and had to depend on intracta-
ble Irish labor and the warring factions of the Credit Mobilier.
The Sierra Nevada furnished the Central Pacific all the timber
needed for ties, trestle-work, and snow-sheds, but the Union
Pacific had little or no timber along its line, except the unser-
viceable Cottonwood of the Platte valley, and many boats were

MO THE UNION PACIFIC RAILWAY.

kept busy for a hundred miles above and below Omaha on the
Missouri River in furnishing ties and heavy timbers. Both roads
were being built through a new, uninhabited, and uncultivated
country, where there were no foundries, machine shops, or any
of the other conveniences of a settled country. The large engine
used in the Union Pacific railway shops was dragged across the
country to Omaha from Des Moines. As to labor, twenty-five
thousand men, about equally divided between the two companies,
are said to have been employed during the closing months of the
great work. Several thousand Chinamen had been imported to
California for the express purpose of building the Central Pacific.
On the Union Pacific, European emigrant labor, principally
Irish, was mostly employed.* At the close of the Rebellion,
many of the soldiers, laborers, teamsters, and camp-followers
drifted west to gather the aftermath of the war in the similar
work of railway construction.

The work was military in character, and one is not surprised
to find among the superintendents and managers a liberal sprink-
ling of military titles. The work was in many respects only an
after-chapter of the Rebellion, added by Columbia "to bring her
work down to date." The surveying parties were always accom-
panied by a detachment of soldiery as a protection against inter-
ference by Indians. The construction trains were amply supplied
with rifles and other arms, and it was boasted that a gang of
track-layers could be transmuted at any moment into a battalion
of infantry. And assaults on the trains by the Indians were not
infrequent. "There was nothing we could ask them [the United
State army] for that they did not give, even when regulations
did not authorize it, and it took a long stretch of authority to
satisfy all our demands. The commissary department was open
to us. Their troops guarded us, and we reconnoitered, surveyed,

'In his annual report for 1863, J. P. Usher, Secretary of the Interior,
reported that out of fifteen hundred laborers employed on the Pacific railway,
three hundred were negroes and " performed their duty faithfully and well."
He seriously recommended legislation with the view of aiding the early employ-
ment of more of the surplus " freedmen " on the same work.

DONE! 141

located and built inside of their picket line. We marched to
work to the tap of the drum with our men armed. They stacked
their arms on the dump and were ready at a moment's warning
to fall in and fight for their territory. General Casement's track-
train could arm a thousand men at a word ; and from him, as a
head, down to his chief spiker, it could be commanded by expe-
rienced officers of every rank, from general to a captain. They
had served five years at the front, and over half of the men had
shouldered a musket in many battles. An illustration of this
came to me after our track had passed Plum Creek, 200 miles
west of the Missouri River. The Indians had captured a freight
train and were in possession of it and its crews. It so happened
that I was coming down from the front with my car, which was a
traveling arsenal. At Plum Creek station word came of this
capture and stopped us. On my train were perhaps twenty men,
some a portion of the crew, some who had been discharged and
sought passage to the rear. Nearly all were strangers to me.
The excitement of the capture and the reports coming by tele-
graph of the burning train brought all men to the platform, and
when I called upon them to fall in to go forward and retake the
train, every man on the train went into line, and by his position
showed that he was a soldier. We ran down slowly until we came
in sight of the train. I gave the order to deploy as skirmishers
and at the command they went forward as steadily and in as good
order as we had seen the old soldiers climb the face of Kenesaw
under fire." Such is the testimony of General G. M. Dodge,
chief engineer of the Union Pacific during its construction.'

' See Paper on Transcontinental Railways, read before the Society of the
Army of the Tennessee, at Toledo, Ohio, September 15, 1888.

Students of folk-lore will doubtless discover some substantial historical
material in the refrain of a song that the author has often heard sung by an old
Irish friend— evidently having seen service in more than one campaign :

" Then drill, my paddies, drill,
Drill, my heroes, drill.
Drill all day,
No sugar in your tay,
Workin' on the U. P. Railway."

M2 THE UNION PACIFIC RAILWAY.

The military coloring of the work of building the Union
Pacific is well described in the following quotation from a news-
paper of the day :

" One can see all along the line of the now completed road
the evidences of ingenious self protection and defense which our
men learned during the war. The same curious huts and under-
ground dwellings, which were a common sight along our army
lines then, may now be seen burrowed into the sides of the hills
or built up with ready adaptability in sheltered spots. The whole
organization of the force engaged in the construction of the road
is, in fact, semi-military. The men who go ahead, locating the
road, are the advance guard. Following them is the second line,
cutting through the gorges, grading the road and building
bridges. Then comes the main line of the army, placing the
sleepers, laying the track, spiking down the rails, perfecting the
alignment, ballasting the rails, and dressing up and completing
the road for immediate use. This army of workers has its base,
to continue the figure, at Omaha, Chicago, and still further east-
ward, from whose markets are collected the materials for construct-
ing the road. Along the line of the completed road are con-
struction trains constantly pushing forward * to the front' with
supplies. The company's grounds and work shops at Omaha are
the arsenal, where these purchases, amounting now to millions of
dollars in value, are collected and held ready to be sent forward.
The advanced limit of the rail is occupied by a train of long box-
cars, with hammocks swung under them, beds spread on top of
them, bunks built within them, in which the sturdy, broad-
shouldered pioneers of the great iron highway sleep at night and
take their meals. Close behind this train come loads of ties and
rails and spikes, etc., which are being thundered off upon the
roadside to be ready for the track-layers. The road is graded a
hundred miles in advance. The ties are laid roughly in place,
then adjusted, gauged, and leveled. Then the track is laid.

"Track-laying on the Union Pacific is a science, and we,
pundits of the far East, stood upon that embankment, only about
a thousand miles this side of sunset, and backed westward before

DONE! M3

that hurrying corps of sturdy operators with a mingled feeling of
amusement, curiosity, and profound respect. On they came. A
light car, drawn by a single horse, gallops up to the front with
its load of rails. Two men seize the end of a rail and start for-
ward, the rest of the gang taking hold by twos, until it is clear of
the car. They come forward at a run. At the word of com-
mand the rail is dropped in its place, right side up with care,
while the same process goes on at the other side of the car. Less
than thirty seconds to a rail fqr each gang, and so four rails go
down to the minute ! Quick work, you say, but the fellows on
the Union Pacific are tremendously in earnest. The moment
the car is empty it is tipped over on the side of the track to let
the next loaded car pass it, and then it is tipped back again, and
it is a sight to see it go flying back for another load, propelled
by a horse at full gallop at the end of sixty or eighty feet of rope,
ridden by a young Jehu, who drives furiously. Close behind the
first gang come the gangers, spikers, and bolters, and a lively
time they make of it. It is a grand Anvil Chorus that those
sturdy sledges are playing across the plains. It is in triple time,
three strokes to the spike. There are ten spikes to a rail, four
hundred rails to a mile, eighteen hundred miles to San Fran-
cisco. . . . Twenty-one million times are those sledges to
be swung — twenty-one million times are they to come down with
their sharp punctuation, before the great work of modern America
is complete !"'

It must be remembered that the only settlements between
Omaha and Sacramento in 1862 were those of the Mormons in
Utah, and Denver and a few mining camps in Colorado and
Nevada. Colorado was given over to the Kansas Pacific,' and Salt
Lake City was left for a branch line ; Ogden, a Mormon town of a
few hundred inhabitants, was the only station between the termini
of the Union-Central Pacific. The necessities of the work of con-

* It is regretted that direct credit can not be given for these paragraphs.
They are quoted in an article on " Pacific Railroads," by W. A. Bell, on pages
572 and 573 of the Fortnightly Review for May, 1 869.

' See page 108, supra.

144 THE UNION PACIFIC RAILWAY.

struction created new settlements and stations as it progressed,
and as fast as the road was completed to each convenient point,
it was operated to it, while the work went on from the terminus-
town as a headquarters or base of operations ; thus, when the
entire line was put in operation, July 15, 1869, such places as
North Platte, Kearney, and Cheyenne, had " got a start," while
other towns, being made the termini of branch lines, secured the
additional impulse due in general to junction towns. Some of
the " headquarters towns," like Benton, enjoyed only a temporary,
Jonah*s-gourd existence, and nothing is now left to mark their
former location. The life in them was rough and profligate
in the extreme. A few paragraphs from the journal of a few
days' sojourn in Benton in August, 1868, are instructive:

" Westward the grassy plain yields rapidly to a desert ; at
Medicine Bow we took final leave of the last trace of fertility, and
traversed a region of alkali flats and red ridges for fifty miles. In
the worst part of this desert, just west of the last crossing of the
Platte, we found Benton, the great terminus town, six hundred
and ninety-eight miles from Omaha. Far as [we] could see
around the town, not a green tree, shrub, or spear of grass was to
be seen ; the red hills, scorched and bare as. if blasted by the
lightnings of an angry God, bounded the white basin on the
north and east, while to the south and west spread the gray desert
till it was interrupted by another range of red and yellow hills.
All seemed sacred to the genius of drouth and desolation. The
whole basin looked as if it might originally have been filled with
lye and sand, then dried to the consistency of hard soap, with
glistening surface tormenting alike to eye and sense.

" Yet here had sprung up in two weeks, as if by the touch of
Aladdin's lamp, a city of three thousand people ; there were
regular squares arranged into five wards, a city government of
mayor and aldermen, a daily paper, and a volume of ordinances
for the public health. It was the end of the freight and passen-
ger, and beginning of the construction, division ; twice every day
immense trains arrived and departed, and stages left for Utah,
Montana, and Idaho ; all the goods formerly hauled across the

DONE! 145

plains came here by rail and were reshipped, and for ten hours
daily the streets were thronged with motley crowds of railroad
men, Mexicans and Indians, gamblers, 'cappers,' and saloon-
keepers, merchants, miners, and mule- whackers. The streets
were eight inches deep in white dust as I entered the city
of canvas tents and pole houses ; the suburbs appeared as
banks of dirty white lime, and a new arrival with black clothes
looked like nothing so much as a cockroach struggling through

a flour barrel

" It was sundown, and the lively notes of the violin and guitar
were calling the citizens to evening diversions. Twenty-three
saloons paid license to the evanescent corporation, and five dance-
houses amused our elegant leisure.

" The regular routine of business, dances, drunks and fist-
fights met with a sudden interruption. . . . Sitting in a tent
door, ... I noticed an altercation across the street, and saw
a man draw a pistol and fire, and another stagger and catch hold
of a post for support. The first was about to shoot again when
he was struck from behind and the pistol wrenched from his hand.
The wounded man was taken into a tent near by and treated with
the greatest kindness by the women, but died the next day. It
was universally admitted that there had been no provocation for
the shooting, and the general voice was, * Hang him ! '

" Next day I observed a great rush and cry on the street, and
looking out, saw them dragging the murderer along towards the
tent where the dead man lay. The entire population were out at
once, plainsmen, miners and women mingled in a, wild throng,
all insisting on immediate hanging. Pale as a sheet and hardly able
to stand, the murderer, in the grasp of two stalwart vigilantes,
was dragged through the excited crowd, and into the tent where
the dead man lay, and forced to witness the laying out and
depositing in the coffin.

" What was the object of this movement nobody knew, but
the delay was fatal to the hanging project. Benton had lately been
decided to be in the military reservation of Fort Steele, and that
10

146 THE UNION PACIFIC RAILWAY.

day the general coraraanding, thought fit to send a provost guard
into the city. They arrived just in time, rescued the prisoner
and took him to the guard house, whence, a week after, he
escaped.

"But the excitement thus aroused seemed to create a thirst
for blood. I had just retired to the tent when I heard a series of
fearful screams, and running to the door, saw the proprietor of a
saloon opposite beating his * woman.' He vfes a leading ruffian
of the city, and of a hundred men looking on not one felt called
upon to interfere. At length he released his hold, and struck her a
final blow on the nose which completely flattened that feature
and sent her into the middle of the street, where she lay with the
blood gushing in torrents from her face, mingling with the white
dust and streaking her clothing with gore. The provost guard
arrived again, after it was all over, and took the woman away, but
paid no attention to the man. Four days after, I saw them
together again, having apparently made it up and living on the
same free and easy terms of illegal conjugality. Two more rows
wound up the evening, the last ending up with a perfect fusilade
of pistol shots, by which only two or three persons were * scratched '
and nobody * pinked.' For a quiet railroad town I thought this
would do, and began to think of moving on.

"The great institution of Benton was the *Big Tent,' some-
times, with equal truth, but less politeness, called the 'Gamblers'
Tent.' This structure was a nice frame, a hundred feet long and
forty feet wide, covered with canvas and conveniently floored
for dancing, to which and gambling it was entirely devoted. It
was moved successively to all the mushroom terminus * cities,'
and during my stay was the great public resort of Benton. A
description of one of these towns is a description of all ; so let
us spend one evening in the * Big Tent,' and see how men amuse
their leisure when home life and society are lacking.

"As we enter, we note that the right side is lined with a
splendid bar, supplied with every variety of liquors and cigars,
with cut-glass goblets, ice -pitchers, splendid mirrors, and
pictures rivaling those of our eastern cities. At the back end a

DONE! 147

space large enough for one cotillon is left open for dancing ; on

a raised platform a full band is in attendance day and night,

while all the rest of the room is filled with tables devoted to

monte, faro, rondo coolo, fortune wheels, and every other species

of gambling known.

• ••••••••••

"During the day the *Big Tent' is rather quiet, but at night,
after a few inspiring tunes at the door by the band, the long hall
is soon crowded with a motley throng of three or four hundred
miners, ranchmen, clerks, * bull-whackers,' gamblers, and * cap-
pers.* The brass instruments are laid aside, the string music
begins, the cotillons succeed each other rapidly, each ending
with a drink, while those not so employed crowd around the
tables and enjoy each his favorite game. To-night is one of
unusual interest, and the tent is full, while from every table is
heard the musical rattle of the dice, the hum of the wheel, or the
eloquent voice of the dealer.

"The evening wears along, many visitors beginning to leave,
the games languish, and a diversion is needed. The band gives
a few lively touches, and a young man with a capacious chest
and a great deal of openness to his face, mounts the stand and
sings a variety of sentimental and popular songs, ending with a
regular rouser, in the chorus of which he constantly reiterates —
in other words, however — that he is a bovine youth with a vitre-
ous optic 'which nobody can deny.* As he wears a revolver and
a bowie-knife in plain view, nobody seems inclined to deny it.
A lively dance follows, the crowd is enlivened, and gambling
goes on with renewed vigor.

"Transactions in real estate in all these towns were, of course,
most uncertain ; and everything that looked solid was a sham.
Red-brick fronts, brown-stone fronts, and stuccoed walls, were
found to have been made to order in Chicago and shipped in
(pine) sections. Ready made houses were finally sent out in lots,
boxed, marked, and numbered ; half a dozen men could erect a

m8 the union pacific railway.

block in a daj», and two boys with screw-drivers put up a * habit-
able dwelling' in three hours. A very good gray-stone stucco
front, with plain sides, twenty by forty tent, could be had for
$300.00 ; and if your business happened to desert you, or the
town moved on, you only had to take your store to pieces, ship
it on a platform car to the next city, and set up again. There
was a pleasing versatility of talent in the population of such towns.

"Ten months afterwards I revisited the site. There was not a
house or tent to be seen ; a few rock piles and half destroyed
chimneys barely sufficed to mark the ruins ; the white dust had
covered everything else, and desolation reigned supreme."'

It had been expected that the Central Pacific, chartered by the
state of California, would build east to the Nevada boundary, and
that the Union Pacific, chartered by the national government,
would build westward from Omaha through the territories to a
meeting at the California boundary. But the object of the Pacific
railway charter was to secure a railway from the Missouri to the
Pacific, by whomsoever constructed, and its terms (section 10 of
the act of 1862) had provided that "in case said first named
[Union Pacific] company shall complete their line {o the eastern
boundary of California before it is completed across said state by
the Central Pacific Railroad Company of California, said first-
named company is hereby authorized to continue in constructing

the same through California until said roads shall

meet and connect, and the Central Pacific Rail-
road Company of California, after completing its road across said
state, is authorized to continue the construction of said railroad
and telegraph through the territories of the United States to the

Missouri river, including the branch lines specified,

until said roads shall meet and connect." This provision was
changed in the Act^of 1864 (section 16) to one that the Central
Pacific might "extend their line of road eastward one hundred
and fifty miles on the established route, so as to meet and con-

'The Undeveloped West, or Five Years in the Territories, by J. H.
Beadle, pages 87 to 99, passim.

DONE ! I 49

nect with the line of the Union Pacific road.*' Of which change
Huntington, of the Central Pacific, has said, " One hundred and
fifty miles ought not to have gone into the bill ; but I said to Mr.
Union Pacific, when I saw it, I would take that out as soon as I
wanted it out. In 1866 I went to Washington. I got a large
majority of them without the use of a dollar." ' Accordingly, the
Act of 1866 renewed the original provision of the Act of 1862,
and provided (section II) that "the Central Pacific Railroad Com-
pany of California, with the consent and approval of the Secretary
of the Interior, are hereby authorized to locate, construct, and
continue their road eastward, in a continuous completed line,
until they shall meet and connect with the Union Pacific Rail-
road."^

The renewed provision resulted . in the greatest race on
record. The Central Pacific had to surmount the Sierra Nevada

' See Bancroft's History of California, Volume VII., page 551, note.

^ When the act of 1866 was under consideration in the Senate, Conness
(California) charged that the act of 1864 had been tampered with. " In 1864 the
Senate passed a Pacific railroad bill ; I had a copy of it before me this morning.
The House of Representatives passed another. The Senate refused to pass the
House bill, and the House refused to pass the Senate bill ; and the matter was
referred to a committee of conference upon the questions of disagreement. In
neither of those bills did this arbitrary condition that I have named, confining
one of these great companies to one hundred and fifty miles east of the Califor-
nia line, occur. It was not in either bill ; there was not a word or a tittle of it

in either. I was a member of the conference committee Point

by point the differences between the two Houses were arranged and agreed
upon, and 1 undertake to say that that arbitrary condition now in the law, and
in the law when it was printed, never was considered in that conference. It was
stolen in through the corruption of some parties and the clerk who eventually
made up the report. The report of the conference committee was presented
here on the last day of the session and compelled to be adopted without exam-
ination. What 1 state cannot be contradicted, and the Senate and Congress
ought to justify itself by a close inquiry as to who dared to make laws for the
Congress of the United States." Congressional Globes 39th Congress, 1st ses-
sion, page 3261, June 19, 1866. When Conness' charge was afterwards read in
the House, by a California representative, in the course of debate on the same
measure, Thad Stevens, who had been a member of the committee of confer-
ence, said, " Although my recollection is precisely that of the Senator, . . .
yet I shall make no charges against anybody." Ibidem, page 3422, June 26, 1866.

ISO THE UNION PACIFIC RAILWAY.

range at the beginning of its course, but the " Big Four," under
the legal disguise of Charles Crocker and Company, were plucky,
and the rise of 7012 feet above the sea level in the one hundred
and five miles east of Sacramento to Summit was accomplished
by the autumn of 1867. The Central Pacific did not wait for
the completion of its fourteen tunnels, and especially its longest
one of more than 1600 feet, at Summit, but hauled iron and
supplies, and even locomotives, over the Sierra Nevada beyond
the completed track, and went ahead with track laying, to be
connected later with the track through the tunnels. The Union
Pacific had comparatively easy work from Omaha along the
Platte valley and up the slope to the summit of the Rocky Moun-
tains, and boasted that their line would reach the eastern side of
the Sierra Nevada before the Central Pacific had surmounted it/
But the boast was not justified.

In the autumn of 1867, the invading army of Mongolians
emerged from the mountains on the west, while the rival army of
Celts had reached the summit of the Black Hills, and were begin-
ning their descent into the Great Basin on the east. Every mile
now meant a prize of from $64,000.00 to $96,000.00 for the con-
tending giants, with the commercial advantage of the control of
the traffic of the Salt Lake valley in addition. The construction
of road went on at the rate of from four to ten miles a day.
Each of the two companies had more than ten thousand men at
work.

" For the purpose of facilitating the work," the amendatory

'In maps published by the Union Pacific in pamphlets in the summer
of 1867, the light line west of the eastern boundary of California is marked
" Central Pacific," and the heavy line from the California boundary to Omaha
is marked " Union Pacific ; " and the line from Fort Bridger to Humboldt
Wells is drawn south of Great Salt Lake, through Salt Lake City. In a map
published by the Central Pacific in the same year, the red line of the Central
Pacific meets the blue line of the Union Pacific between Fort Bridger and the
Utah-Wyoming boundary, and the line sweeps north of Great Salt Lake. See
also map published in Harpers^ Monthly^ June, 1867, page 3, and a map in
Dilke's Greater Britain^ Volume I., page 95 (written in 1867 or 1868); in the
two latter maps, the line of railway passes through Salt Lake City and along
the south shore of the lake to the later route in the vicinity of Humboldt Wells.

DONE ! I 5 ^^

Act of 1864 had permitted, on the certificate of the chief engineer
and government commissioners that a portion of the work
required to prepare the road for the superstructure was done,
that a proportion of the bonds to be fully earned on the final
completion of the work, not exceeding two-thirds of the value of
the portion of the work done, and not exceeding two-thirds of
the whole amount of bonds to be earned, should be delivered to
each company ; the full benefit of this inducement was sought
by each of the contestants. The Union Pacific company had its
parties of graders working two hundred miles in advance of its
completed line in places as far west as Humboldt Wells, but
financial difficulties prevented its following up this advantage.
The Central Pacific Company, on the other hand, had its grading
parties one hundred miles ahead of its completed line and thirty
miles east of Ogden. When the two roads met at Promontory
Point, it was found that the Central Pacific had graded eighty
miles to the east that it would never cover and the Union' Pacific
had wasted a million dollars on grading west of the meeting
place that it could not use. The Central Pacific had craftily
obtained from the Secretary of the Treasury an advance of two-
thirds of the bond subsidy on its graded line to Echo Summit,
about forty miles east of Ogden, before its completed line had-
reached Promontory Point ; while the Union Pacific had actually
laid its track to and westward from Ogden, and appeared thus to
have gained the advantage of controlling the Salt Lake valley
traffic from Ogden as a base. The Union Pacific was pushing
westward from Ogden with its completed line about a mile dis-
tant from and parallel with the surveyed and graded line of the
Central Pacific, and the two companies were each claiming the
right to build the line between Ogden and Promontory Point on
their separate surveys. The completed lines were threatening to
lap as the graded lines already lapped, when Congress interfered
and tried to clear the muddle by statute. Before Congress could
reach a conclusion, the companies compromised their differences,
and Congress then approved the settlement by a joint resolution,
April 10, 1869, "That the common terminus of the Union Pacific

152 THE UNION PACIFIC RAILWAY.

and the Central Pacific Railroads shall be at or near Ogden ; and
the Union Pacific Railroad Company shall build and the Central
Pacific Railroad Company pay for and own the railroad from the
terminus aforesaid to Promontory Summit, at which point the
rails shall meet and connect and form one continuous line." In
the following year, Congress, by further enactment, fixed " the
common terminus and point of junction" at a particular point
about five miles " northwest of the station at Ogden;" later the
Union Pacific leased to the Central Pacific the five miles of track
between the station at Ogden and the point fixed by Congress ;
thus Ogden became the actual point of junction of the two links
of the completed Pacific railway.

It had at first been generally assumed that the transcontinen-
tal railway would pass through Salt Lake City and south of Great
Salt Lake,' and the Mormons had used their influence to obtain
such a route ; but before the final surveys were made, the north
line was found by the Union Pacific to be more acceptable and
was approved by the government. Brigham Young thereupon
called a meeting of the dignitaries of the Mormon Church, and
an order was issued that no Mormon should make further grad-
ing contracts with the Union Pacific. As the Mormon traffic was
one of the prizes of the railway race, and the assistance of Mor-
mon contractors was highly needful, the Union Pacific manage-
ment awaited with some apprehension the action of the Central
Pacific, but the latter also decided in favor of the route along the
north shore, and Zion had to be content with the prospect of a
future branch line. The Mormons then resumed their old rela-
tions with the eastern company, and many miles of well graded
road-bed bear witness of their participation in the great enter-
prise.

The disputed question of the point of junction did not inter-
fere with a due celebration of the meeting and joining of the two
" ends of track " at Promontory Point on the loth of May, 1869
A space of about one hundred feet was left between the ends of
the lines. Early in the day, Leland Stanford, Governor of Cal-

^ Supra, page 150, note.

DONE! 153

ifornia and President of the Central Pacific, arrived with his
party from the west ; during the forenoon, Vice-President Dur-
ant and Directors Duff and Dillon, of the Union Pacific, with
other prominent men, including a delegation of Mormon saints
from Salt Lake City, came in on a train from the east. The
national government was represented by a detachment of " regu-
lars " from Fort Douglas, with the opportune accessories of orna-
mental officers and a military band. Curious Mexicans, Indians,
and half-breeds, with the Chinese, negro, and Irish laborers, lent
to the auspicious little gathering a suggestive air of cosmopoli-
tanism. The ties were laid for the rails in the open space, and
while the coolies from the west laid the rails at one end, the pad-
dies from the east laid them at the other end, until they met and
joined. The " last spike " remained to be driven. Telegraphic
wires were so connected that each blow of the descending sledge
could be reported instantly on the telegraphic instruments in
most of the large cities from the Atlantic to the Pacific ; corre-
sponding blows were struck on the bell of the City Hall in San
Francisco, and with the last blow of the sledge a cannon was
fired at Fort Point. General Safford presented a spike of gold,
silver and iron as the offering of the Territory of Arizona ; Tut-
tle, of Nevada, performed with a spike of silver a like office for
his state. The tie of California laurel was put in place, and
Doctor Harkness, of California, presented the " last spike " of
gold in behalf of his state. A silver sledge had also been pre-
sented for the occasion. The driving of the spike by President
Stanford and Vice-President Durant was greeted with lusty cheers
by the onlookers, and the hurrahs and shouts of the little crowd
of six hundred persons, to the accompaniment of the screams of
the locomotives' whistles and the blare of the military band, in the
midst of the desert, found hearty and enthusiastic echoes in the
great cities east and west. After the last spike had been driven,
the Central Pacific train was backed up, and the Union Pacific
locomotive, with its train, passed slowly over the point of junc-
tion and back again ; then the Central Pacific locomotive, with

154 THE UNION PACIFIC RAILWAY.

its train, went through the same ceremony, and the two engines
stood where they inspired Bret Harte to write

WHAT THE ENGINES SAID.

What was it the Engines said,
Pilots touching, — head to head.
Facing on the single track.
Half a world behind each back ?
This is what the Engines said,
Unreported and unread.

With a prefatory screech.
In a florid western speech.
Said the Engine from the West,
" I am from Sierra's crest ;
And, if altitude's a test,
-Why, I reckon, it's confessed.
That I've done my level best."

Said the Engine from the East,
"They who work best talk the least,
S'pose you whistle down your brakes ;
What you've done is no great shakes,
Pretty fair, — but let our meeting
Be a different kind of greeting.
Let these folks with champagne stuffing,
Not their Engines, do the puffing.

" Listen I Where Atlantic beats
Shores of snow and summer heats ;
Where the Indian autumn skies
Paint the woods with wampum dyes,
I have chased the flying sun.
Seeing all he looked upon.
Blessing all that he has blest.
Nursing in my iron breast
All his vivifying heat.
All his clouds about my crest ;
And before my flying feet
Every shadow must retreat."

Said the Western Engine, " Phew ! "
And a long, low whistle blew.

DONE! 1 55

" Come now, really that's the oddest
Talk for one so very modest.
You brag of your East ! You do ?
Why, I bring the East to you !
All the Orient, all Cathay,
Find through me the shortest way ;
And the sun you follow here
Rises in my hemisphere.
Really, — if one must be rude, —
Length, my friend, ain't longitude."

Said the Union, " Don't reflect, or
I'll run over some Director."
Said the Central, " I'm Pacific,
But, when riled, I'm quite terrific.
Yet to-day we shall not quarrel.
Just to show these folks this moral.
How two Engines — in their vision —
Once have met without collision."
That is what the Engines said,
Unreported and unread ;
Spoken slightly through the nose,
With a whistle at the close.

The "driving of the last spike " was simultaneously announced
by telegraph in all the large cities of the Union. Telegraphic
inquiries at the Omaha office, from which the circuit was to be
started, were answered: "To everybody. Keep quiet. When
the last spike is driven at Promontory Point, we will say * Done.*
Don't break the circuit, but watch for the signals of the blows of
the hammer." Soon followed the message from Promontory
Point, "Almost ready. Hats off; prayer is being offered;" then,
" We have got done praying. The spike is about to be pre-
sented," and — "All ready now. The spike will soon be driven.
The signal will be three dots for the commencement of the
blows." The magnet tapped — One — Two — Three — then paused
— "Done!" Wires in every direction were "hot" with con-
gratulatory telegrams. President Grant and Vice-President Col-
fax were the recipients of especially felicitous messages. In San
Francisco it had been announced on the evening of the 8th of

156 THE UNION PACIFIC RAILWAY.

May from the stages of the theaters and other public places that
the two roads had met and were to be wedded on the morrow.
The city could not wait ; the celebration began at once and prac-
tically continued through the loth. The booming of cannon
and the ringing of bells were united with the other species of
noise-making in which jubilant humanity finds expression for its
feelings on such an occasion. The buildings in the city and the
shipping in the harbor were gay with flags and bunting. Busi-
ness was suspended, and the longest procession that San Fran-
cisco had ever seen attested the enthusiasm of the people. At
night the city was brilliant with illuminations. Free railway
trains filled Sacramento with an unwonted crowd, and the din of
cannon, steam whistles and bells followed the final message. At
the eastern terminus in Omaha, the firing of a hundred guns on
Capitol Hill, more bells and steam whistles, and a grand proces-
sion of fire companies, civic societies, fraternities, citizens and
visiting delegations from surrounding places, echoed the senti-
ments of the Californians. In Chicago a procession of four
miles in length, a lavish display of decorations in the city and on
the vessels in the river, and an address by Vice-President Colfax
in the evening, were the evidences of the city's feeling. In New
York, by order of the mayor, a salute of a hundred guns
announced the culmination of the great undertaking. In Trinity
church the Te Deum was chanted and prayers were offered, and
when the services were over the chimes rung out " Old Hun-
dred," the "Ascension Carol" and national airs. The ringing
of bells on Independence Hall and the fire stations in Philadel-
phia produced an unusual concourse of citizens to celebrate the
national event. In the other large cities of the country the
expressions of public gratification were hardly less hearty and
demonstrative.

But when were the Central Pacific and Union Pacific com-
pleted? The Act of 1862 provided (section vi) that "after said
road is completed, until said [government subsidy] bonds and
interest are paid, at least five per centum of the net earnings of
said road shall also be annually applied to the payment thereof."

DONE! 157

Though the entire line, in sections of twenty and forty miles, had
been inspected and approved by government commissioners as
often as reported under oath by the presidents of the companies
to be complete, so that they might obtain their government bonds
and issue their own bonds in an equal sum. Congress, to " make
sure," resolved (April 10, 1869) "that to ascertain the condition
of the Union Pacific Railroad and the Central Pacific Railroad,
the President of the United States is authorized to appoint a
board of eminent citizens, not exceeding five in number, and who
shall not be interested in either road, to examine and report on
the condition of, and what sum or sums, if any, will be required
to complete, each of said roads, for the entire length thereof to
the [common] terminus as a first class railroad, in compliance
with the several acts relating to said roads." The " five eminent
citizens " appointed on the board were Hiram Walbridge, S. M.
Fenton, C. B. Comstock, E. F. Winslow, and J. F. Boyd. In
October, 1869, they filed an oracular report with the Secretary of
the Interior that, "in the opinion of the commission, the require-
ments of the law will be satisfied, and the designs of Congress
carried out, if the roads be properly located, with judicious
grades ; have substantial roadbeds of good width ; ballasting
which with proper care, shall be able to keep the track in good
condition throughout the year ; permanent structures for crossing
streams, good cross-ties, iron and joint fastenings ; sufficient sid-
ings, water tanks, buildings, machinery and adequate rolling-
stock, the more important machine shops and engine houses
being of masonry; and the commission is glad to be able to say
that, in its opinion, while some expenditures still need to be
made, these two roads are substantially such roads to-day. The
expenditures needed for completion, will be given in detail for
each road." The report was closed with a detailed estimate of
$576,650.00 and $1,586,100.00 as the amounts of the expendi-
tures needed on the Central Pacific and Union Pacific respec-
tively. In accordance with the joint resolution of April 10, 1869,
the Secretary of the Treasury withheld $1,000,000.00 of bonds
claimed to be due the companies and exacted from them under-

158 THE UNION PACIFIC RAILWAY.

takings and collateral security for the completion of each road
according to law; and the Secretary of the Interior issued no
more patents for the land grant, until the "five eminent citizens"
might prophecy.

In November, 1869, after the rendition of the Janus-headed
report of the "eminent citizens " in the preceding month, the
Secretary of the Treasury seemed to have gleaned from it that the
roads were " completed,'* and released to the company the bonds
withheld from them and the collateral security deposited by them,
the companies undertaking that the requirements of the commis-
sion should be complied with. But the Secretary of the Interior
was only half convinced, as evidenced by his order of November
3, 1869, to the Commissioner of the General Land Office : —

" Sir : [the commissioners'] report being accepted

and made the basis of an adjustment of the accounts between the
United States and said railroad companies, you are hereby author-
ized to commence the patenting of lands to said companies,

as follows : In addition to the bonds retained

by the United States as security for the completion of said roads

in the matters reported deficient, one-half of the

lands ready for patenting to the Union Pacific Company will
have patents suspended until further directions from this
department. The other half may be patented to said company.

Patents to the Central Pacific may in like man-
ner issue."

For nearly five years the Secretary of the Interior declined to
give " further directions," and the companies applied in vain for
patents for the balance of their land grant. In May, 1874, on
application of the Union Pacific, the Acting Secretary of the
Interior appointed another commission of three sagacious citi-
zens (James Moore, Ira L. Merriam, and J. S. Delano), whom he
instructed :

" Sirs : On the 30th of October, 1869, ' five eminent citizens,'
who were appointed commissioners by the President, under joint
resolution of loth April, 1869, reported certain deficiencies in
the construction of the Union Pacific railroad.

DONE! 159

" The president of the company that constructed said road
applied, on the 8th instant, for its examination, to determine
whether it has been completed as required by law and the report
of said commissioners.

" You are hereby appointed commissioners to make such
examination and report to this department.

"It will be your duty to examine said road with special refer-
ence to the deficiencies above referred to, and to report whether
they have been supplied. If they have been, and the road is
completed as required by law and departmental instructions, you
will ascertain as near as possible, and report the date of such
completion.

" You will report whether the company has shown a disposi-
tion to act in good faith in supplying such deficiencies ; give full
and exact information as to the present condition of the road ;
and, if it be not yet completed, state what is, in your judgment,
necessary to such completion."

The verdict of this inquest was, " This commission has . .
decided that the road was completed as required by law, by the
report of the former commission, and to comply with the instruc-
tions of the Interior Department, October i, 1874, at a total cost
of $115,214,587.79, as shown by the books of the company."

When the Secretary of the Treasury (Bristow), as directed by
the Act of 1874, demanded of the Union Pacific Company the
payment of the five per centum of the net earnings applicable
" after said road is completed,'''- his demand extended back to "the
6th day of November, 1869, the day of completion of said Union
Pacific Railroad ;" in the case of the Central Pacific, the demand
extended back to "the i6th day of July, 1869, the day of the
completion of said Central Pacific Railroad." In opposition to
this view the companies naturally enough insisted, in and out
of court, that the day reported by the commission of three
(October i, 1874) was the date of completion, — a view readily
endorsed, of course, by the obsequious government directors."

' See page 106, supra.

■See Report of Government Directors for the year 1875.

l60 THE UNIOxN PACIFIC RAILWAY.

When a suit, brought by the United States against the Union
Pacific to recover the five per cent of net earnings, reached the
Supreme Court for decision in the fall of 1878, Justice Bradley,
delivering the opinion of the court, was not willing to say when
the Union Pacific was completed (if, indeed, a railroad could
ever, in one sense, be completed) but held simply that by the
attitude assumed by the company for the purpose of obtaining its
subsidy bonds, it was* estopped to deny that at the time the last
bonds were delivered, November 6, 1869, the road was com-
pleted, even though required at the same time to give security
that it should be made more complete/

The question of the eastern terminus of the Union Pacific was
ihvolved for a long time in as much doubt and obscurity as the
questions of western terminus and time of completion. Where
is the eastern terminus ? The Act of 1862 seemed to intend it to
be at a point on the looth meridian on the edge of the desert in
Nebraska ; the amendment of 1866 permitted the construction of
the line " from Omaha . . . westward . . . without
reference to the initial point on the looth meridian ; " according
to the Act of 1862 — an act " to aid in the construction of a rail-
road . . . from the Missouri River to the Pacific Ocean,
[etc.]," the Union Pacific was required to construct its Iowa (or
Omaha) branch from a point on the western boundary of the
State of Iowa, to be fixed by the President of the United States."
Abraham Lincoln had first fixed the point " within the limits of
the township, in Iowa, opposite the town of Omaha, in
Nebraska," and later more particularly as "east of, and opposite
to, the east line of Section Ten . . . " — a section bounded
on the east by the Missouri River.'* Finally, the Bridge Act
(approved February 24, 187 1) gave to the Union Pacific authority
" to issue such bonds and secure the same by mortgage on the

' United States vs. Union Pacific Railroad Company, 99 U. S. R., 402.

" As a matter of fact, the Union Pacific did not locate its Council Bluffs
station or end of line opposite Section Ten, but a considerable distance south of
it; as noted in the decision of the case of Union Pacific Railroad Company vs.
Hall, et al., cited on page 161, infra.

DONE! l6l

bridge [between Omaha and Council Bluffs] and approaches and
appurtenances, as it may deem needful to construct and maintain
its bridge over said' [Missouri] river, and the tracks and depots
required to perfect the same, as now authorized by law. . . .
Provided, that nothing in this act shall be so construed as to
change the eastern terminus of the Union Pacific railroad from
the place where it is now fixed under existing laws, nor to
release said . . . company . . . from its obligations as
established by existing laws." The Union Pacific persisted in
regarding Omaha as the terminus, made up all its trains there,
and operated the bridge and approaches as a stub-line with Coun-
cil Bluffs at the end of the stub. Citizens of Council Bluffs
applied to the United States courts for a writ of mandamus to
compel the Union Pacific to operate its line from their city as the
true terminus of the line, required by its charter to be operated
as " a continuous line." The snarl was left for the Supreme
Court to untangle. " From Omaha westward" probably did not
mean "from Council Bluffs westward." "From the Missouri
River " might mean "from either the east or west side of the Mis-
souri River." "The western boundary of the State of Iowa" was
the middle of the Missouri River, and probably the point had in
mind by Lincoln was not strictly on that boundary line. It
required much acute reasoning and legal hairsplitting for the
Supreme Court to decide that " the legal terminus of the railroad
is fixed by law on the Iowa shore of the river " and to sustain the
lower court in ordering that the writ of mandamus issue,
though even then Justice Bradley dissented from the opinion of
the court on the ground that the whole river was the boundary
and " from the river or boundary of Iowa westward " meant
" from the western shore of the river westward," an interpretation
that he considered to be approved by Congress in the Bridge
Act.'

Whatever may be the technical termini of the Union Pacific
or the date of its completion, the past or present relations of the
corporation to the government or people, or the industrial and

* Union Pacific Railroad Company vs. Hall et al., 91 U. S. R., 343.
II

l62 THE UNION PACIFIC RAILWAY.

political forces that created the company and the railway, the
fact remains that the building of the Pacific railway marks an
epoch in the history of railways. The great length of the line,
the rapidity with which it was constructed and equipped, the
extreme natural difficulties presented by the country it traversed,
and the important industrial and political results that have fol-
lowed its completion afford ample justification for the erection at
Sherman, on the Union Pacific — for many years the highest rail-
way station in the world, — of a massive granite monument in
memory of the Ames brothers (Oakes Ames and Oliver Ames),
to whose energy and ability the successful completion of the
Union Pacific is most justly ascribed. But with all honor to the
men whose individual efforts have contributed most to the accom-
plishment of a great national purpose, the Pacific railway itself is
a greater monument to the irrepressible and progressive energy
of the people of the United States.

CHAPTER VI.

CREDIT MOBILIER.

The instrumentality through which the Union Pacific railway
was built is one of the most interesting and instructive features
of its development. It was quite typical of railway construction
from 1855 to 1880, and holds up before the mind of the student
one of the darkest phases of the railway problem.

The Board of Commissioners met at Chicago in September,
1862, and was organized by the election of officers. Books were
then opened in the large cities of the country for subscriptions
of stock, and by October, 1863, 2180 shares had been subscribed
and $218,000.00 had been paid in. The first meeting of stock-
holders was held in New York, October^ and 30, 1863, and
directors and other officers were elected. The directors were
thirty in number ; the other officers were John A. Dix, presi-
dent ; ThomasC.Durant,. vice-president ; Henry V. Poor, secre-
tary ; John J. Cisco, treasurer.

Durant was the active man in the management of the com-
pany's business. In August, 1864, ^^ had one H. M. Hoxie, an
irresponsible man (an employ^ in charge of the ferry at Omaha),
offer to take a contract for the construction of the line one hun-
dred miles Westward from Omaha at $50,000.00 per mile, to be
paid in securities of the company ; this proposition was signed
" H. M. Hoxie, by H. C. Crane, attorney," and Crane was the
"confidential man" in Durant*s office. October 3, 1864, " H.
M. Hoxie, by H. C. Crane, attorney," proposed to the company
that if his contract be made to extend from one hundred miles
so as to cover the distance from Omaha to the one hundredth
meridian, he would subscribe or cause to be subscribed $500,-

163

i64 THE UNION PACIFIC RAILWAY.

ooo.oo of stock in the Union Pacific Railroad Company; the
proposition was accepted by the company. On the 7th of the
same month, Hoxie agreed to assign his contract to Durant or
any person he (Durant) might designate ; on the same day, the
assignment was made to a company (simple partnership — not a
corporation or company of limited liability) composed of Durant,
McComb and a few others, all stockholders in the Union Pacific.
The scheme is plain enough. Durant's theory was that all the
money made out of the Union Pacific project would be made in
the construction of the road, and that the road itself would never,
as a legitimate business enterprise, yield a profit. The govern-
ment had offered an immense bonus to any set of men that
would build the road, and in order to get the benefit of the
bonus, the persons controlling the company had to control the
construction contracts and share in their profits.

The construction company formed by Durant subscribed
Si, 600,000.00 to carry out the Hoxie contract and paid in twenty-
five per cent of the amount subscribed. By the time the
second assessment was made, the immense responsibility and
unlimited liability had frightened the members of the company
and they failed to respond with further payments. At this point
the since famous Credit Mobilier was brought into service.

From i8.()0 to i860, before general incorporation laws were
common, when each corporation was the creation of a special
legislative enactment, what might be called " charter shops" came
to be among the established industries of the country. Charters
were obtained from state legislatures, principally by persons of
past political influence and usefulness, not for the purpose of
using them but of selling them to others to use. Such charters,
of course, contained as broad and elastic provisions as could be
obtained by the applicants for them ; they were thus more serv-
iceable and salable as stock in trade. Duff Green had been an
editor and politician of some importance during Jackson*s admin-
istration, but in 1859 h^ ^^d become dusty on the back shelf
of politics ; and when, in that year, he applied to the legislature of
Pennsylvania for a charter fit to be used for a stock brokerage

CREDIT MOBILIER. 165

company, investment company, railroad company, or almost any
kind of company, the childish old man was tolerated and his
whim satisfied with little hesitafion ; the result was the legal entity
known by the innocent corporate name of the " Pennsylvania
Fiscal Agency," possessed of conveniently elastic powers and a
limitation of liability of its shareholders to the amount of stock
subscribed.

Durant had evidently anticipated the difficulties to be encoun-
tered in the unlimited individual liability of the contractors for
the construction of the Union Pacific, and as early as March,
1864, through the mediation of irrepressible George Francis
Train, had purchased the charter of the Pennsylvania Fiscal
Agency for future use. Soon after the purchase, the name of the
corporation was changed by legislative enactment to " The Credit
Mobilier of America."' Under the liberal provisions of the
charter, an agency or branch was established in New York, with
a railroad bureau under five (afterward seven) managers, elected
from among the directors and stockholders. After the members
of Durant's construction company had made their first payments,
their attention was turned to the Credit Mobilier, and they were
given stock in it for the amounts they had paid in on the capital
of the construction company. Holders of the i>2, 180,000.00 of
Union Pacific stock were then permitted either to receive Credit

'The change of name is said to have been inspired by George Francis
Train, who had spent much time in France and, while there, had been much
impressed by the operations of the famous Credit Mobilier of France. The lat-
ter had been chartered in France in 1853, under the influence of the brothers
Isaac and 6mile P^reire, for the development of railways, public works, and
other internal improvements and for general banking and stock brokerage
operations. The company accomplished by its aid •the establishment of
the Paris Gas Company, the Paris Omnibus Company, and the Grand Hotel du
Louvre, and promoted railway enterprises in France, Switzerland, Spain, Aus-
tria and Russia. Excessive dividends in 1855 were followed by decreasing
profits until 1867, when the company went into liqiiidation and bequeathed to its
managers (who had accumulated from its gambling schemes great private for-
tunes) a crushing burden of litigation and public condemnation. The change
in name of the Pennsylvania corporation was unfortunate. (See Rowland
Hazard's "Credit Mobilier of America," pages 15-17.)

1 66 THE UNION PACIFIC RAILWAY.

Mobilier stock for the amounts they had paid in or to sell it to the
Credit Mobilier or back to the Union Pacific for what they had
paid in on it. Thus the stockholders in the Union Pacific and
Credit Mobilier became identical, as persons, though their hold-
ings of stock in the two corporations were not in the same pro-
portion.

The Hoxie contract (covering the line from Omaha to the
looth meridian, two hundred and forty-seven miles) was assigned
to the Credit Mobilier, and by that corporation performed, the
work being finished on the 5th of October, 1866.

Next a mysterious contract was made by Durant and a man
suggestively named Boomer (afterward declared to have enjoyed
existence only in Durant's fertile imagination) for the construc-
tion of one hundred and fifty-three miles westward from the
1 00th meridian, at the rate of $19,500.00 per mile east, and
$20,000.00 per mile west, of the crossing of the Platte River,
bridges, station houses, and equipments to be paid for in addition.
The work of construction proceeded, however, without particular
reference to any contract, being actually done by the Credit
Mobilier, until fifty-eight miles were completed. January 5,
1867, the board of directors of the Union Pacific resolved, "That
the Union Pacific Railroad Company will, and do, hereby con-
sider the Hoxie contract extiended to the point already completed,
namely, three hundred and five miles west from Omaha, and
that the officers of this company are hereby authorized to settle
with the Credit Mobilier at $50,000.00 per mile for the addi-
tional fifty-eight miles." The resolution was not enforced,
because of a written protest filed by Durant with the board
of directors, and of a more efficacious writ of injunction sued
out against them by him before Judge Barnard in New York.
With the same object in view, in June, 1867, the board of
directors of the Union Pacific contracted with J. M. S. Williams
(with the provision that, when made, the contract should be
assigned to the Credit Mobilier), for the building of two hun-
dred and sixty-eight miles westward from the looth meridian
to the base of the Rocky Mountains, at the rate of $50,000.00

CREDIT MOBILIER. 167

per mile, including the portion of the line already completed
west of the looth meridian, and now increased from fifty-eight
to ninety-eight miles. But another protest from Durant, and
another writ of injunction from a New York court, effectually
restrained the performance of the Williams contract on the part
of the company.

The quarrel of the factions in the Union Pacific and Credit
Mobilier was the outgrowth of a deep seated disagreement
between Durant and his friends on one side, and the New England
stockholders, the Ameses, Hazards, Alley, and their friends on
the other side. Durant and his party were wasteful and extrava-
gant, and favored the subordination of the whole project to the
purpose of profits from construction, even at the expense of a
cheaply built railway ; the more conservative New England party,
on the other hand, while not averse to large profits from con-
struction, held in view as an object the ultimate success of the
Union Pacific as an investment, and favored the construction of
a substantial and well equipped railway. The latter party, being
uppermost in the Credit Mobilier, ousted Durant from the
directory, and elected Sidney Dillon in his stead as president ;
in the Union Pacific, however, Durant's party had more relative
strength, and he remained vice-president and a director, though
Oliver Ames was elected president. -

Durant declared, when the Union Pacific had reached the
1 00th meridian, that the Credit Mobilier, as a corporation,
should never have another construction contract, and he had the
power, in the peculiar relations of the two companies, to main-
tain his position. But while Durant had aggressiveness, the
New Englanders had money, and peace was welcome to both
parties. In the summer of 1867 the factions reconciled their
differences, and from the compromise resulted the Oakes Ames
contract and the anomalous Seven Trustees.

In August, 1867, the Union Pacific voted to Oakes Ames a
contract for constructing and equipping six hundred and sixty-
seven miles of road west of the looth meridian at rates varying
from $42,000.00 to i>96,ooo.oo per mile and aggregating about

1 68 THE UNION PACIFIC RAILWAY.

i>47,ooo,ooo.oo. Thereupon, in pursuance of the compromise
made by the factions, a tri-partite agreement was entered into by
Oakes Ames, party of the first part; Seven Trustees (Thomas C.
Durant, Oakes Ames, John B. Alley, Sidney Dillon, Cornelius S.
Bushnell, Henry S. McComb, and Benjamin E. Bates, all
stockholders in both corporations), parties of the second part;
and the Credit Mobilier, party of the third part; by the terms of
which the three parties assumed the following obligations: (i)
Oakes Ames assigned and transferred his contract to the Seven
Trustees. (2) The Credit Mobilier was to advance to the Seven
Trustees the means to perform the contract at seven per cent
interest, guaranteed the performance of the contract, and was to
hold Oakes Ames and the Seven Trustees harmless from loss
under the contract for a commission of two and one-half per
cent on the money advanced. (3) The Seven Trustees were to
carry out all the provisions of the Oakes Ames contract, to
reimburse the Credit Mobilier and themselves all money
advanced, to pay over in June and December of each year "his
just share and proportion ... of the . . . net profit
on said contract ... to each shareholder in said Credit
Mobilier of America, who, being a stockholder in the Union
Pacific Railroad, shall have made and executed his power of
attorney or proxy, irrevocable to said [Trustees] empowering
them ... to vote upon at least six-tenths of all the shares
of stock owned [or to be owned] by said shareholders of the
Credit Mobilier of America in the capital stock of the Union
Pacific Railroad Company," and "this trust . . . shall not
inure in any manner or degree to the use or benefit of any stock-
holder of the Credit Mobilier of America, who shall neglect or
refuse to execute and deliver [to the Trustees] his proxy or
power of attorney ... or who shall in any way ....
interfere with the execution or performance of the trust;
and finally the Seven Trustees were to pay to the Credit Mobilier
the net profits of the construction of the fifty-eight miles completed
prior to January i, 1867. The resort to the compromise Trust
was made subject to the written consent of every stockholder of

CREDIT MOBILIER. 1 69

the Union Pacific, which was obtained by October, 1867. As
soon as the Seven Trustees began the performance of their duties,
they entered into an agreement among themselves to cast their
own votes and the votes controlled by their proxies, for such
directors of the Union Pacific as the existing board of directors
should nominate, or to reelect the existing board if they should fail
to nominate another; any Trustee failing to keep his agreement
was to forfeit all the benefits of the Trust. The management of
the Trust was further "bT)iled down'* by the appointment of an
"executive committee" of three (John B. Alley, Rowland
Hazard, and Sidney Dillon) who should wield its entire power,
subject only to such regulations as should be made' at periodical
meetings of the Seven Trustees.

Under the Trustees the construction of the Union Pacific was
pushed until the track reached a point nine hundred and fourteen
miles from Omaha ; then a contract similar to the Ames contract
was made with one J. VV. Davis for the construction of the remain-
ing one hundred and twenty-five miles at an expense of about
^23,400,000.00, was assigned to the same Trustees, and was per-
formed by them in the same manner as the Ames contract. The
Union Pacific had no money and paid the Seven Trustees for the
work, as fast as completed, in government subsidy bonds, first
mortgage bonds, land grant bonds, income bonds and stock.' The
Trustees sold some of the securities and used the proceeds in meet-
ing the expenses of construction ; the surplus of securities and
money they distributed among the Credit Mobilier stockholders
entitled, by the terms of the trust, to participate in them.

The entire ingenious system was simply the machinery by
which the owners of the Union Pacific insured to themselves the
profits of constructing and equipping the road. The use of the
Credit Mobiliercharter was intended to relieve the constructors of

* As to the Union Pacific stock, which the law provided (supra, page 126)
should l>e paid for in cash at not less than par, the Union Pacific would give the
Trustees its check to apply on construction account, and the Trustees would then
deliver the check back to the Union Pacific in payment of stock. This was
called a cash transaction, and was thus entered on the books of account of the
parties.

I/O THE UNION PACIFIC RAILWAY.

individual liability in a doubtful enterprise; the resort to the
Trust (made necessary by the Durant quarrel) was not considered
as destroying the advantage of the corporate organization ; as a
matter of law, however, the Seven Trustees made themselves
personally liable, by the tri -partite agreement, for the expense of
constructing the Union Pacific.

II.

The machinery of the Credit Mobilier and Seven Trustees is
generally considered to have given to the Credit Mobilier stock-
holders abnormal profits, at the expense of the bounty of the
government, often called a "trust fund" for the building of the
Union Pacific, and to have burdened the railway with a load of
debts that makes it scant security for the repayment of the means
advanced by the United States in aid of its construction.

What were the profits, as compared with the outlay? The
Wilson Committee' arrived at $23,366,319.81 as the "total cash
profit'* on an expenditure of $50,720,958.94.'' J. B. Crawford, in
his "Credit Mobilier of America" (pages 71 and 72), finds the
net profits to have been $8,141,903.70, on an expenditure of
about $70,000,000.00. Rowland Hazard, one of the "executive
committee of the Seven Trustees," has said, "After nearly four
years of investment, [the stockholders of the Credit Mobilier]
received sixty per cent in cash, eighty per cent in first mortgage
bonds, and seventy-five per cent in income bonds. Taking these
securities at their current prices, by their sale, and the cash divi-
dends, each stockholder would receive his money back, and nine-
tenths as much more ; that is, ninety per cent paid for four years
investment at the end of the time. Add the bonus bonds, and it
will be a little less than one hundred and twenty per cent. Besides
this, [they] received by the purchase at four dollars and a half

and by dividend, six hundred and fifteen per cent in

stock of the Union Pacific Railroad. This, at the time, had little

* Infra, pages 178-179.

2 Affairs of Union Pacific Railroad Company, House of Representatives
Reports, No. 78 (page 15), 426. Congress, 3d Session.

CREDIT MOBILIER. I /I

or no market value On [the] basis of [fifty cents on

the dollar in 1881 for the Union Pacific stock], the total profit
received by the stockholders of the Credit Mobilier was about
$15,000,000.00 on an expenditure of about $70,000,000.00, or a
little over twenty per cent. This is a high estimate, and is prob-
ably more than was realized by the great majority of stockholders.
. . . . On [the] basis of [the value of the stock as esti-
mated at the time], the total profit would be about $6,000,000,
or less than nine per cent, on the expenditure.*

The testimony of the bookkeepers of the Credit Mobilier,
Ham and Crane, before the Wilson Committee, was to the effect
that the profit of constructing the Union Pacific was as follows:

COST TO COST TO

UNION PACIFIC. CONTRACTORS.

PROFIT.

Hoxie Contract - $12,974,416.24 $7,806,183.33 $5,168,232.91

Ames Contract - 57,140,102.94 27,285,141.99 29,854,960.95

Davis Contract - 23,431,768.10 15,629,633.62 7,802,134.48

Total, $93,546,287.28 $50,720,958.94 $42,825,328.34

But the profit ascertained by their computation consisted
largely of bonds and stock, included at par, but actually depreci-
ated in value and disposed of at a discount ; when the allowance
is made for the depreciation in value, the apparent total profit of
$42,825,328.34 shrinks to $23,366,319.81.

Again, by computing the profits on another basis, the divi-
dends declared were as follows :

DATE. CHARACTER. FACE VALUE. CASH VALUE.

1 Dec. 12, 1867 First-mortgage bonds $2,543,208.00 $2,161,726.80

2 Dec. 12, 1867 Union Pacific stock 2,543,208.00 726,962.40

3 Jan. 3, 1868 First-mortgage bonds 748,000.00 635,800.00

4 June 17, 1868 Cash 2,201,204.00 2,201,204.00

5 July 18, 1868 Cash 1,112,768.00 1,112,768.00

6 July 3, 1868 First-mortgage bonds 2,804,050.00 2,383,442.50

7 Dec. 29, 1868 Union Pacific stock 7,500,000.00 2,250,000.00

« r\^ tcaq ( Credit Mobilier divi- ) ^/,«orx/^/>/> .^,n«««««

8 Dec. 1868 |dendofi2^on58mile5 \ ^20,000.00 420,000.00

Total, $19,872,438.00 $11,891,903.70

' See the " Credit Mobilier of America," a paper read by Rowland Hazard,
before the Rhode Island Historical Society, February 22, 188 1, pages 27-29.

172 THE UNION PACIFIC RAILWAY.

By still another method of computation, the government sub-
sidy bonds and the Union Pacific first-mortgage bonds would
appear to have paid for the construction of the railway, leaving
the income bonds, land grant bonds, and Union Pacific stock as
profit, as follows :

FACE VALUE. CASH VALUE.

Government bonds - - - 527,236,512.00 $27,145,163.28

First-mortgage bonds - - - 27,213,000.00 23,718,008.77

Total, ...... ^8550,863,172.05

Total cost of road to contractors - - - 50,720,958.94

142,213.11

Income bonds - - . . . 9,355,ooo.oo

Land grant bonds - . . . . 9,224,000.00

Union Pacific stock - - - 536,000,000.00, 10,800,000.00

Total profit ..... 529,521,213.11

From this " total profit " the capital of the Credit Mobilier,
$3,750,000.00 (which was entirely consumed) ought probably
to be deducted, leaving the profit, on that basis, 525,771,213.11.

While the results of different computations by different per-
sons are at great variance, and the books of the companies them-
selves do not afford exact information of the profit made in the
construction of the Union Pacific, it is safe to say that it was
in excess of $20,000,000.00. Both Mr. Hazard and Mr. Craw-
ford, in their publications, convey a wrong impression by com-
puting the entire amount expended on the Union Pacific as a
basis for the percentage of profit earned. The truth is that
although from $50,000,000.00 to $70,000,000.00 were actually
expended in the construction of the railway and its equipment,
no such sum was invested by the Credit Mobilier and Trustees at
any one time. The capital of the Credit Mobilier was at first
$2,500,000.00, and after being increased was only $3,750,000.00 ;
and a large part of the capital invested was replaced on the com-
pletion of each section of twenty miles by the proceeds of the
government bonds and railway bonds and stock received. It is
hardly probable that more than $10,000,000.00 was actually
invested in the construction of the Union Pacific at any one time ;

CREDIT MOBILIER. 173

in that case, if the profit of {20,000,000.00 were earned in four
years, the profit for each year would be $5,000,000.00, or fifty per
cent on the capital actually invested.

The amount of land granted to the Union Pacific under its
charter was 11,309,844 acres ; the amount of money realized by
the company from its sales of land to December 31, 1SS6, was
$19,090,672.42, and the value at that time of the unsold lands
was estimated at $2,395,507.00.'

The haste in which the Union Pacific was built, at a time when
the price of labor and material was extremely high, government
bonds at a discount, gold at a premmm, and the national currency
inflated, and before the road (until January, 1867) had any other
road within a hundred miles of a connection with it, increased the
cost of it enormously. If the road had been built at an ordinary
time, in an ordinary manner, and under ordinary conditions, the
bonus of government bonds and land grant . would have been
nearly, if not quite, sufficient to build and equip the raiU*ay. As
the matter stood when the work was completed, the earning
power of the Union Pacific had to be exerted to pay interest on
$27,000,000.00 of first-mortgage bonds, $27,000,000.00 of govern-
ment bonds, $10,000,000.00 of income bonds, $10,000,000,00 of
land grant bonds, and if anything should be left, to pay divi-
dends on $36,000,000.00 of stock — in round numbers, a total of

' See Reports of the United States Pacific Railway Commission, Senate
Executive Documents No. 51, 50th Congress, ist Session. The status of the
land grant of all parts of the Pacific railway, as contemplated by the Act of
1864, was, in 188'', as follows :

Amount realized to Value ot lands un-

Acres granted. Dec 31, 1886. sold Dec 31. i^d.

Union Pacific 11,309,844 $19,909,672.42 $a«395>507>oo

Central Pacific 8/x»/xx> 7>332>58i.34 i3.soo,ocxxoo

Western Pacific 453*794

Kansas Pacific 6/xx>/x» 11,816,695.35 11,608,763.00

Central Branch Union Pacific 222,560 i/xx>.ooo.oo

Sioux City & Pacific 43*33^ 239,364.60

Total 26,029,534 $39»479»2i3-7i $26,504,270.00

Compare the number of acres granted with the areas of the following
states: Kentucky, 24,115,200 acres; Virginia, 24,542,720 acres; Ohio, 25,576,-
960 acres; Louisiana, 26,461,440 acres.

174 THE UNION PACIFIC RAILWAY.

5110,000,000.00, or about four times what the railway ought to
have cost.

III.

In another r61e, the Union Pacific and the Credit Mobilier,
its alter ego, had a historic part to play.

Before 1867 it was extremely difficult to secure capitalists to
invest in either Union Pacific or Credit Mobilier stocks. Even at
that late day most capitalists regarded the Pacific Railway as des-
tined to failure, and the reluctance to put money into the hazard-
ous venture was increased by the fact that speculators and vision-
aries of the type of Durant, Hallett, and George Francis Train
seemed to be in control of it, with a dead weight of stock jobbers
and public plunderers hanging at their heels. But Oakes Ames
was a man of exceptional energy and business ability, blunt, hon-
est and successful, above all, a man of ample personal means and
the influence to command the means of others. Though he had
been a member of the House Committee on the Pacific Railroad
in 1864, when the charter was completed, and had supported the
bill that ripened into the Act of 1864, he had looked on the pro-
ject only in the patriotic light in which most other public men
had regarded it. He was first identified with the active manage-
ment of the enterprise in the fall of 1865, but through the year
1866 the dissensions of the factions prevented progress. When,
however, in 1867, ^^ " P^t his shoulder to the wheel " in the *'Ames
contract," developed the mechanism of the Seven Trustees, recon-
ciled the differences of the factions, and personally solicited the
assistance of wealthy and influential men (to some of whom he
gave his own guaranty against loss by the investment), success was
assured. The capital stock of the Credit Mobilier, $2,500,000.00,
had been exhausted in construction expenditures, and no divi-
dends had been paid. In February, 1867, the capital stock was
increased fifty per cent, to $3,750,000.00, and the original stock-
holders were encouraged to increase their original holdings one-
half by offering te each one of them subscribing for the increase
a Union Pacific first mortgage bond of $1,000.00 as a bonus for

CREDIT MOBILIER. 1/5

each subscription of a thousand dollars in the increased stock.
Six hundred and fifty shares of the increase remained undisposed
of and were sold to Oakes Ames and Durant (two hundred and
eighty to the former and three hundred and seventy to the latter)
with which to fulfill promises to purchasers that they claimed to
have made. Of those sold to Oakes Ames, some appeared after-
wards to have been distributed by him among members of Con-
gress in December, 1867, and January, 1868. 1

A misunderstanding had arisen through a claim made by
Henry S. McComb to three hundred and seventy-five shares of
stock,^two hundred and fifty of original and one hundred and
twenty-five of increase stock. In 1866, H. G. Fant, a friend of
McComb, had subscribed, through him, for two hundred and
fifty shares of stock, but had failed to honor a draft made by
McComb on him in payment of the subscription. The weight
of the evidence afterwards taken by the Poland Committee shows
that the transaction was cancelled, but when Credit Mobilier
stock suddenly became valuable in December, 1867, McComb
made claim for the stock subscribed by Fant and the increase of
fifty per cent that would have gone with it, insisting that he had
had to make good his agreement with Fant out of his own stock.
None of the other stockholders supported McComb in his posi-
tion and he had consented in writing to the apportionment of
the last stock to Ames and Durant. But he evidently expected
to be able at least to coerce a settlement from the other stock-
holders and accordingly begun a suit against them in Pennsyl-
vania in September, 1868, to get the stock claimed, with the
dividends declared on it, or the value of them — $300,000.00 or
i>4oo,ooo.oo. The suit dragged on until 1872, some testimony
having been taken in the meantime before a master in chancery.
McComb placed much reliance on three letters that Ames had
written to him from Washington, letters that did not make
his case stronger, but gave him an apparent leverage for a favor-
able settlement in that they seemed to implicate Ames in securing
or attempting to secure favorable legislation for, or lack of inter-
ference with, the affairs of the Union Pacific, by presents or sales

176 THE UNION PACIFIC RAILWAY..

at less than market value of Credit Mobilier stock to members of
Congress.

In the letter of January 25, 1868, Ames wrote : " Yours of
23d is at hand, in which you say Senators Bayard and Fowler
have written you in relation to their stock. I have spoken to
Fowler but not to Bayard ; I have never been introduced to Bay-
ard, but will see him soon. You say I must not put too much in
one locality. I have assigned as far as I have gone to, 4 from
Mass., I from N. H., i Pelaware, i Tenn., i Ohio, 2 Penn., i
Ind., I Maine, and I have three to place where they will do most
good to us. I am here on the spot, and can better judge where
they should go." In the second letter, on the 30th of the same
month, he wrote : ** I don't fear any investigation here. What
some of Durant*s friends may do in N. Y. courts can't be counted
upon with any certainty. You do not understand, by your letter,
what I have done, and am to do with my sales of stock.
You say none to N. Y. I have placed some with N. Y. or
have agreed to. You must remember it was nearly all placed as
you saw on the list in N. Y., and there was but 6 or 8 m for me
to place. I could not give all the world all they might want out
of that. You would not want me to offer less than one m to any
one. We allow Durant to place 58,000 to some 3 or 4 of his
friends, or keep it himself. I have used this where it will pro-
duce most good to us, I think. In view of King's letter and
Washburne's move here, I go for making our bond dividend in
full." In the third letter, February 22, 1868, Ames wrote : ** I
think Grimes will sell a part of his [Credit Mobilier stock] at
$350. I want that 14,000 increase of the Credit Mobilier to sell
here. We want more friends in this Congress, and if a man
will look into the law (and it is difficult for them to do it
unless they have an interest to do so) he can not help being
convinced that we should not be interfered with." On the
back of the second letter was a memorandum list claimed by
McComb to have been made by him at the dictation of Ames
in New York, and indicating what disposition had been made
of stock in Washington. The- memorandum was as follows :

CREDIT MOBIL'IER. 177

" Oakes Ames' list of names as showed to-day to me for C. M. :
Blaine of Maine, 3,000. Patterson, N. Hamp., 3,000. Wilson,
Mass., 2. Painter, Rep. for In., 3. S. Colfax, Speaker, 2. Elliott,
Mass., 3. Dawes [Mass.] 2. Boutwell [Mass.] 2. Bingham and
Garfield, Ohio. Schofield & Kelley, Penn. Fowler, Tenn. Feb.
I, 1868."

Offers of compromise, one on the basis of $100,000.00, were
made to Ames, with significant reference to the three letters,
before they were introduced in evidence, but Ames refused to
settle, and the letters were put in evidence before the master in
chancery. The evidence was kept out 'of sight for a while, but
by some means wa3 finally revealed to a newspaper correspond-
ent ; on September 4, 1872, the New York Sun published a
sensational synopsis of the evidence, including the letters, under
the headlines, " The King of Frauds. How the Credit Mobilier
Bought its way through Congress." In the midst of a presiden-
tial campaign, and when most of the men named in McComb's
memorandum were candidates for public offices, the article in the
Su^i, followed by columns of matter in other papers, created a
profound sensation. Liberal Republicans and Democrats were
bitterly denouncing the abuses of public office and the political
corruption that had followed in the wake of the Rebellion ; the
Credit Mobilier expos^ was eagerly taken up and used by them
as a political weapon. Such of the men in the list as were likely
to be affected by the reports rushed before the public with abso-
lute denials of all connection with the Credit Mobilier or Union
Pacific and with all too ready declarations that the reports were /
only " campaign slanders.'* — ^

When Congress began its session in the following December,
Speaker Blaine called S. S. Cox to the chair, and off/Cred from
the floor a resolution (which was readily agreed to by the House)
as follows :

" Whereas, accusations have been made in the public press,
founded on the alleged letters of Oakes Ames, a representa-
tive from Massachusetts, and upon the alleged affidavit of
Henry S. McComb, a citizen of Wilmington, in the State of
12

178 THE UNION PACIFIC RAILWAY.

Delaware, to the effect that members of this House were bribed
by Oakes Ames to perform certain legislative acts for the benefit
of the Union Pacific Railway Company, by presents of stock in
the Credit Mobilier of America, or by presents of a valuable
character derived therefrom ; Therefore,

" Resolved, That a special committee of five members be
appointed by the Speaker pro tempore^ whose duty it shall be to
investigate and ascertain whether any member of this House was
bribed by Oakes Ames, or any other person or corporation, in
any manner touching his legislative duty.

" Resolved further. That the committee have the right to
employ a stenographer, and that they be empowered to send for
persons and papers."

Accordingly, Luke P. Poland (Vermont), Nathaniel P. Banks
(Massachusetts), James B. Beck (Kentucky), William E. Niblack
(Indiana), and George W. McCreary (Iowa) were named as the
Special Committee.

On the 6th of the following month (January, 1873), Wilson,
(Indiana) presented a resolution for another committee of inves-
tigation as follows :

Resolved, That a select committee of five members of this
House be appointed by the Speaker, and such committee be, and
is hereby, instructed to enquire whether or not any person con-
nected with the organization or association comuionly known as
the " Credit Mobilier," now holds any of the bonds of the Union
Pacific Railroad Company, for the payment of which, or the
interest thereon, the United States is in any way liable ; and
whether or not such holders if any, or their assignees, of such
bonds, are holders in good faith, and for value, or procured the
same illegally or by fraud, and whether or not the United States
may properly refuse to pay interest thereon, or the principal
thereof, when the same shall become due, and whether or not any
relinquishment of first mortgage lien that may heretofore have
been made by the United States with reference to the bonds of
said Railroad Company may be set aside, and to enquire into the
character and purpose of such organization, and what officers of

CREDIT MOBILIER. » 179

the United States or members of Congress have at any time been
connected therewith, what connection it had with the contracts
for the construction of said Union Pacific Railroad Company,
and to report the facts to this House, together with such bill
as may be necessary to protect the interests of the United States
on account of any of the bonds of the class hereinbefore referred
to ; and said committee is authorized to send for persons and
papers, and to report any time.*'

The committee appointed under this resolution consisted of
J. M. Wilson (Indiana), Samuel Shellabarger (Ohio), George F.
Hoar (Massachusetts), Thomas Swann (Maryland), and H. W.
Slocum (New York).

The two committees were intended to cover, in their invest!
gations all the matters of interest involving the Union Pacific, the
Credit Mobilier, Congress, and the Government. The Poland
Committee began its sessions with closed doors, but the public
could not wait for information, and suspicions of " whitewashing "
intentions were freely entertained and expressed ; by resolution
the House promptly opened the doors, and the national appetite
for sensational news was regaled through the newspapers with
daily reports of the evidence taken ; the Wilson Committee took
the hint and applied the " no secrecy " resolution of the House to
its sessions. After six weeks of almost daily sessions, the two i

committees reported their findings and recommendations and I

the evidence taken in full.

The testimony taken by the Poland Committee was referred
to the Committee on the Judiciary under a resolution of the
House, "That the testimony taken by the committee of this
House of which Mr. Poland, of Vermont, is Chairman, be referred
to the Committee on the Judiciary, with instructions to enquire
whether anything in such testimony warrants articles of impeach-
ment of any officer of the United States not a member of this
House, or makes it proper that further investigation should be
ordered in this case." ^ -

The Committee on the Judiciary reported, of course, that '
impeachment could not be resorted to, because none of the acts

1 80

THE UNION PACIFIC RAILWAY.

complained of had been done by a person who was an officer at
the time of their commission or an officer at the time of investi-
gation as well as when the acts were committed. The committee
exceeded its instructions (though that seemed to be the rule of
the day) by discussing and condemning the remedy by expulsion
of members from Congress for acts committed before their term
in Congress in which they should be expelled.

The evidence reported by the Poland Committee showed that
all the transactions of Oakes Ames and members of Congress had
been in the long session of the 40th Congress, and principally in
December, 1867, and January, 1868. The members and ex- mem-
bers implicated, with their positions at the times of the transac-
tions complained of and of the investigation of them, were as

follows:

1867-1868.

Representative,
Representative,
Representative,

1 Oakes Ames, Mass.,

2 James G. Blaine, Me.,

3 Henry L. Dawes, Mass.,

4 Glenni W. Schofield, Penn., Representative,

5 John A. Bingham, Ohio,

6 William D. Kelley, Penn.

7 James A. Garfield, Ohio,

8 James Brooks, N. Y.,

9 Schuyler Colfax, Ind.,

Representative,
Representative,
Representative,
Representative,
Representative,

(Speaker),
10 James W. Patterson, N. H. Senator,

11 Roscoe Conkling, N. Y.,

12 Henry Wilson, Mass.,

13 B. F. Boyer, Penn.,

14 John A. Logan, 111.,

15 Samuel Hooper, Mass.,

16 James F. Wilson, Iowa,

17 J. W. Grimes, Iowa,

18 George S. Boutwell, Mass.,

19 James F. Bayard, Del.,

20 William B. Allison, Iowa,

21 John B. Alley, Mass.,

22 Thomas D. Eliot, Mass.,

Senator,

Representative,

Senator,

Representative,

Senator,

Representative,

1872-1873.

Representative.

Representative (Speaker),

Representative.

Vice President.

Senator.

Vice President elect.

(Out of Office).

Senator.

Representative.

(Out of Office).

Secretary of the Treasury.

(Out of Office).

(Deceased).

The report of the Poland Committee concerned only the first

CREDIT MOBILIER. l8l

eight, as they were the only ones at that time members of the

House ; and as to them the findings were as follows : » P^

1. Oakes Ames, for the purpose of creating in members of
Congress a feeling favorable to the Union Pacific (and Credit
Mobilier) had sold or agreed to sell to them stock in the Credit ajP
Mobilier at par when it was worth much more, but instead of ^
having the stock transferred to the purchasers on the books of
the company, had kept it in his own name as " trustee," had
received the dividends and accounted for them to the purchasers.
His purpose was not to secure positive beneficial legislation, but
to prevent possible detrimental legislation, particularly legislative
regulation of freight and passenger rates on the Union Pacific, as
advocated by C. C. Washburn (Wisconsin) and E. B. Washburne
(Illinois). His acts were tantamount to bribery — in the opinion
of the' committee.

2. Blaine had considered the advisability of purchasing
shares of Credit Mobilier stock, recommended by Ames, but had
declined to take them.

3. Da\Yes had purchased from Ames and paid for ten shares
of Credit Mobilier stock in January, 1868 (the latter guaran-
teeing a profit of at least ten per cent), but became alarmed by
litigation in December, 1868, returned the stock and dividends
($400.00) to Ames, and received from him the amount paid for
the stock with interest at ten per cent.

4. Schofield had purchased from Ames ten shares of Credit
Mobilier stock at par in December, 1867, and received two divi-
dends (one of eighty per cent, in Union Pacific bonds and one
of sixty per cent, in cash), and then in June, 1868, exchanged
his Credit Mobilier stock with Ames for a Union Pacific bond of
S 1, 000.00 and ten shares of Union Pacific stock.

5. Bingham had bargained with Ames for twenty shares of
Credit Mobilier stock in December, 1867, and received part of
the dividends ; in February, 1872, he had settled with Ames, the
latter keeping the stock and accounting to him (Bingham) for all
dividends.

6. Kelley had agreed with Ames in December, 1867, to take

1 82 THE UNION PACIFIC RAILWAY.

ten shares of Credit Mobilier stock, but had not the money to
pay for it ; Ames agreed to carry it for him until he could pay
for it. By June, 1868, the dividends on the stock amounted to
$329.00 more than the par value of the stock with interest.
Ames paid to Kelly the $329.00, as well as $750.00 later, in Sep-
tember, 1868, as part of further dividends. (Kelley had testified
that he understood the payments were loans to him from Ames,
and the evidence of the two men was at complete variance).

7. Garfield's case was exactly the same as that of Kelley up to
the point of the receipt ot $329.00 ; after that there were no deal-
ings between him and Ames. (Like Kelley, Garfield had also
testified he understood the payment of the $329.00 to be a loan).

As to all of the members (except Ames and Brooks) reported
on, the committee made the following childish findings :

r~ " The committee do not find that Mr. Ames, in his negotia-
tions with the persons above named, entered into any detail of
the relations between the Credit Mobilier Company and the
Union Pacific Company or gave them any specific information as
to the amount of dividends they would be likely to receive further
than [that the stock was good and would pay at least ten per cent].
They all knew from him, or otherwise, that the Credit Mobilier
was a contracting company to build the Union Pacific road, but
it does not appear that any of them knew that the profits and div-
idends were to be in stock and bonds of that company.

"The Credit Mobilier Company was a state corporation, not
subject to Congressional legislation, and the fact that its profits
were expected to be derived from building the Union Pacific road
did not, apparently, create such an interest in that company as to
disqualify the holder of Credit Mobilier stock from participating
in any legislation affecting the railroad company. In his nego-
tiations with these members of Congress, Mr. Ames made no
suggestion that he desired to secure their influence in Con-
gress in favor of the railroad company, and whenever the ques-
tion was raised as to whether the ownership of the stock would
in any way interfere with or embarrass them in their action as
members of Congress, he assured them it would not.

CREDIT MOBILIER. 1 83

"The committee, therefore, do not find, as to the members of
the present house above named, that they were aware of the object
of Mr. Ames, or that they had any other purpose in taking this
stock than to make a profitable investment. It is apparent that
those who advanced their money to pay for their stock present
more the appearance of ordinary investors than those who did
not, but the committee do not feel at liberty to find any corrupt
purpose or knowledge founded upon the non-payment alone.

"It ought also to be observed that those who surrendered
their stock to Mr. Ames before there was any public excitement
upon the subject, do not profess to have done so upon any idea
of impropriety in holding it, but for reasons affecting the value
and security of the investment. But the committee believe that
they must have felt that there was something so out of the ordi-
nary course of business in the extraordinary dividends they were
receiving as to render the investment itself suspicious, and that
this was one of the motives of their action.

"The committee have not been able to find that any of these
members of Congress have been affected in their official action in
consequence of their interest in Credit Mobilier stock.

" It has been suggested that the fact that none of this stock
was transferred to those with whom Mr. Ames contracted was a
circumstance from which a sense of impropriety, if not corrup-
tion, was to be inferred. The committee believe this is capable
of explanation without such inference. The profits of building
the road undei the Ames contract were only to be divided
among such holders of Credit Mobilier stock as should come in
and become parties to certain conditions set out in the contract
of transfer to the trustees, so that a transfer from Mr. Ames to
new holders would cut off the right to dividends from trustees,
unless they also became parties to the agreement; and this the com-
mittee believe to be the true reason why no transfers were made.

"The committee are also of opinion that there was a satis-
factory reason for delay on Mr. Ames' part to close settlements
with some of these gentlemen for stock and bonds he had
received as dividends upon the stock contracted to them.

1 84 THE UNION PACIFIC RAILWAY.

"In the fall of 1868, Mr. McComb commenced a suit against
the Credit Mobilier Company and Mr. Ames and others, claim-
ing to be entitled to two hundred and fifty shares of the Credit
Mobilier stock upon the subscription for stock to that amount. The
suit is still pending. If Mr. McComb prevailed in that suit, Mr.
Ames might be compelled to surrender so much of the stock
assigned to him as trustee, and he was not therefore anxious to
have the stock go out of his hands until that suit was terminated.
It ought also to be stated that no one of the present members of
the House above named appeared to have any knowledge of the
dealings of Mr. Ames with other members.

" The committee do not find that either of the above named
gentlemen, in contracting with Mr. Ames, had any corrupt
motive or purpose himself, or was aware that Mr. Ames had any,
nor did either of them suppose he was guilty of any impropriety
or even indelicacy in becoming a purchaser of this stock. Had
it appeared that these gentlemen were aware of the enormous
dividends upon this stock, and how they were to be earned, we
could not thus acquit them. And here as well as anywhere, the
committee may allude to that subject. Congress had chartered
the Union Pacific road, given to it a liberal grant of lands, and
promised a liberal loan of government bonds, to be delivered as
fast as sections of the road were completed. As these alone
might not be sufficient to complete the road. Congress authorized
the company to issue their own bonds for the deficit, and secured
them by a mortgage upon the road, which should be a lien prior
to that of the Government. Congress never intended that the
owners of the road should execute a mortgage on the road prior
to that of the Government to raise money to put into their own
pockets, but only to build the road.

" The men who controlled the Union Pacific seem to have
adopted as the basis for their action the right to encumber the
road by a mortgage prior to that of the Government to the full
extent, whether the money was needed for the construction of the
road or not.

" It was clear enough they could not do this directly and in

CREDIT MOBILIER. 1 85

terms, and therefore they resorted to the device of contracting
with themselves to build the road, and fix a price high enough
to require the issue of bonds to the full extent, and then divide
the bonds or proceeds of them under the name of profits on the
contract. All those acting in the matter seem to have been fully
aware of this, and that this was to be the effect of the transaction.
The sudden rise in value of Credit Mobilier stock was the result
of the adoption of this scheme. Any undue and unreasonable
profits thus made by themselves were as much a fraud upon the
government as if they had sold their bonds and divided the money
without going through the form of denominating them profits on
building the road.

" Now had these facts been known to these gentlemen, and
had they understood that they .were to share in the proceeds of
the scheme, they would have deserved the severest censure."

8. As to B rook s, the committee reported that through his
ability and promise to "take care of the Democratic side of the
House," and through his appointment as government director of
the Union Pacific, he had obtained, in January or February, 1868,
fifty shares of Credit Mobilier stock at par, and $5,000.00 of
Union Pacific bonds, from the Credit Mobilier trustees, though
he had had them entered on the records of the companies in the
name of one Neilson, his son-in-law ; and that by reason of his
former intimate connection with the affairs of the two companies,
he had full and complete knowledge, at all times, of their inter-
relations and their relations with the government.

As to the other men mentioned in connection with the all-
absorbing scandal, the evidence taken by the Poland and Wilson
Committees made the following revelations :

9. Colfax had purchased twenty shares of Credit Mobilier
stock at par from Ames in December, 1867, and had paid $534.72
on the purchase in March, 1868; at this point Colfax insisted
that he had rescinded the contract of purchase and donated the
$534.72 to millionaire Ames on account of the latter*s recent
financial embarrassments ; Ames, however, testified that Colfax
had received dividends amounting to about $700.00 over and

1 86 THE UNION PACIFIC RAILWAY.

above the par value of the stock ; the weight of evidence sup-
ported Ames in his statement.

10. j^atterson had purchased thirty shares of Credit Mobilier
stock from Ames in August, 1867, and had afterwards received
$6,685.24 in ca.sh, one hundred shares of Union Pacific stock and
$2,000.00 in Union Pacific income bonds as dividends, — though
he testified that he had given $3,000.00 to Ames to invest for
him and supposed he had invested it for him in Union Pacific
stocks and bonds and not in Credit Mobilier stock.

11. Q)n.kling, (18) Boutwell, and (22) EUo'c had never had
anything to do with either the Credit Mobilier or the Union
Pacific.

12. Henry Wilson in December, 1867, had contracted for
twenty shares of Credit Mobilier stock for his wife (who had
received a gift of $3,800.00 from friends on the twenty-fifth
anniversary of their marriage), but, becoming dissatisfied, had
rescinded the contract, had returned $814.00 of dividends paid
to him, and received back from Ames the purchase money.

13. Boyer and his wife had together held one hundred shares
of Credit Mobilier stock. He insisted that it was a legitimate
and honorable transaction, and had not affected him in the
discharge of his public duties. He regretted, "as the invest-
ment turned out to be profitable," "that it was no larger in
amount."

14. Logman, in December, 1867, agreed to purchase at par ten
shares of Credit Mobilier stock, but did not pay for it. Two div-
idends in 1868 amounted to more than the par value of the stock
and interest, and in June, 1868, he received from Ames the sur-
plus of $329.00. In the following month he became apprehensive
of trouble and returned the money.

15. Hooper (as head of the Boston house of Samuel Hooper
and Comp'any), (17) Grimes, and (21) Alley had become the own-
ers of Union Pacific stock and Credit Mobilier stock as early as
1866, and had continued to be such up to the time of the invest-
igation.

16. James F. Wilson had held fifty shares of Credit Mobilier

CREDIT MOBILIER. 1 87

stock from the summer of 1868 to some time in 1869, and had
then disposed of it.

19. Bayard had been written to by McComb to take some
Credit Mobilier stock, about January, 1868, but had referred the
matter to his son, and afterwards had refused to have anything to
do with the stock.

20. Allison had held ten shares of Credit Mobilier stock (pur-
chased from Ames) from the winter of 1867- 1868 or spring of
1868, and had received dividends of more than the par value of
the stock. He had not paid for the stock, but the par value had
been deducted from the dividends and he had received the sur-
plus. Ames testified that after the beginning of the investigation
Allison had arranged with him to consider the deal canceled
until after the trouble should have "blown over."

The Poland committee, in the resolution creating it, had been
instructed simply to "investigate and ascertain whether any mem-
ber of [the] House was bribed by Oakes Ames, or any other per-
son or corporation, in any manner touching his legislative duty," *
but exceeded its instructions, to act as a jury and return a special
verdict, and after finding Ames and Brooks guilty, took the lib-
erty to recommend a punishment for them, and after recommend-
ing the punishment fit for their crime, acted on the floor of the
House as prosecuting attorneys to have the punishment inflicted.*
The committee offered and vigorously urged the passage of two
resolutions of expulsion :

" I. Whereas, Mr. Oakes Ames, a Representative in this
House from the State of Massachusetts, has been guilty of sell-
ing to members of Congress shares of stock in the Credit
Mobilier of America, for prices much below the true value of
such stock, with intent thereby to influence the votes and decis-
ions of such members in matters to be brought before Congress
for action; Therefore,

* See pages 177-178, gupra.

^ Compare with ihis the more honorable attitude of Morrill in the Senate in
presentmg the resolution for the expulsion of Senator Patterson. Infra, pages
190-191.

i _ ^^ . ^

- T

:r.:. nil -.-r Tirr

' /- y .• f

CREDIT MOBILIER. 1 89

punishment of all crimes and offenses against the laws should be
after trial by jury and judgment of a court of competent juris-
diction ; Therefore,

" Resolved, That in the judgment of the House, as it
appears there is probable cause to believe, from the report of the
testimony submitted by the Select Committee of investigation of
the matter of the Credit Mobilier, that grave offenses, punishable
by the statutes of the United States, as well as at common law,
such as giving or receiving bribes, or false swearing, may have
been committed, as shown in said testimony, within the District
of Columbia, that, therefore, the Clerk of the House be, and is
hereby, ordered to cause a copy of the testimony so taken to be
forwarded to the District Attorney, the prosecuting officer of the
United States for said district, with the recommendation of this
House that the same and other testimony which he may deem
material he shall cause to be presented to the grand jury sitting
in and for said district at the next session thereof ; that he may
take such action in the premises as to law and justice shall apper-
tain."

The debate on the Poland resolution began on the 25th of
February, 1873, ^^^ occupied the major part of three days. As
it progressed, it became plain that the Butler view had many
supporters, and that the required two-thirds of the House could
not be induced to vote for expulsion. Thereupon Sargent
(California) offered a resolution that was substituted for the Poland
resolution by a test vote of 115 to no (15 not voting); it was as
follows : ^

"Whereas, by the report of the Special Committee herein, it «
appears that the acts charged against members of this House in
connection with the Credit Mobilier of America, occurred more
than five years ago, and long before the election of such persons
to this Congress, two elections by the people having intervened ;
and, whereas, grave doubts exist as to the rightful exercise by this
House of its power to expel a member for offenses committed by
such member long before his election thereto, and not connected
with such election ; Therefore,

190 THE UNION PACIFIC RAILWAY.

" Resolved, That the Special Committee be discharged from
the further consideration of the subject.

" Resolved, That the House absolutely condemns the conduct
of Oakes Ames, a member of this House from Massachusetts, in
seeking to procure Congressional attention to the affairs of a cor-
poration in which he was interested, and whose interest directly
depended upon the legislation of Congress, by inducing mem-
( bers of Congress to invest in the stocks of said corporation.
' " Resolved, That this House absolutely condemns the con-

duct of James Brooks, a member of this House from New York,
for the use of his position as government director of the Union
Pacific Railroad, and a member of this House, to procure the
assignment to himself or family, of stock in the Credit Mobilier
of America, a corporation having a contract with the Union
Pacific Railroad, and whose interest depended directly upon the
legislation of Congress."

rOn separate votes, February 27, 1873, the resolution in con-
demnation of Ames was agreed to by a vote of 182 to 36 (22 not
voting); of Brooks, by a vote of 174 to 32 (34 not voting). The
preamble was rejected by a vote of 113 to 98 (29 not voting).
After the voting was over, it is said that "men who had just
joined in the vote of condemnation against Mr. Ames, gathered
around him to ask his pardon for having done so. They said to
him * We know that you are innocent ; but we had to do it in
( order to satisfy our constituents.* " '

Resolutions of condemnation of Kelley and Hooper were
laid on the table.

In the Senate, a Select Committee, consisting of Morrill,
Scott, Wright, Stockton and Stevenson, was appointed to con-
sider the evidence taken by the House committees, and reported
February 27, 1873, ^ resolution "That James W. Patterson be,
and he is hereby, expelled from his seat as a member of the Sen-
ate." On the ist of March, 1873, Morrill, as chairman of the
committee, called the attention of the Senate to the resolution,
but expressly disclaimed, that he intended to act as prosecu-

' Crawford's Credit Mobilier of America, page 216.

CREDIT MOBILIER. IQI

tor in urging an agreement to it ; he simply left it for the
independent action of the Senate. Senators demanded for
the consideration of the resolution, before acting upon it, more
time than the pressure of public business (only two week-days of
the session remaining) would afford ; it was left over for consid-
eration ajt the next session ; Patterson's term expired on the 4th
of March, and the resolution was not again heard of ! ^

On the 8th of May, 1873, exactly ten weeks from his public
condemnation, the death of Oakes Ames resulted from the
immense exertions of building the Union Pacific and the excite-
ment and disgrace of the Credit Mobilier scandal ; the death of
Brooks followed soon afterwards.

The Wilson committee ' reported a bill having for its object
the recovery of the excessive profits of the Credit Mobilier for
the benefit of the United States.' The bill reported was not
acted on, but when the legislative appropriation bill was reached
at the end of the session, a section ^ was added to give effect to
the recommendations of the committee. It provided for a suit
in equity by the United States against (i) the Union Pacific
Railroad Company, and " all persons (2) who may . . .
have subscribed for or received capital stock in said road, which
stock has not been paid for in full in money, or (3) who may have
received, as dividends or otherwise, portions of the capital stock
of said road, or the proceeds or avails thereof, or other property
thereof, or other property of said road, unlawfully and contrary to
equity, or (4) who may have received as profits or proceeds of con-
tracts for construction, or equipments of said road, or other con-
tracts therewith, money or other property which ought, in equity,
to belong to said railroad corporation, or (5) who may, under pre-
tense of having complied with [the Pacific railway] acts . . .
have wrongfully and unlawfully received from the United States
bonds, moneys, or lands which ought, in equity, to be accounted

* See pages 178-179, supra.

" See Report of Wilson Committee on Affairs of Union Pacific Railroad Com-
pany, House of Representatives Reports, 42d Congress, 3d Session, No. 78.

3 Section IV., Act of March 3, 1873, 17 Statutes, 508.

192 THE UNION PACIFIC RAILWAY.

for and paid to said railroad company or to the United States,
and to compel payment for said stock, and the collection and
payment of such moneys, and the restoration of such property,
or its value, either to said railroad corporation or to the United
States, whichever shall in equity be held entitled thereto." To
make the suit fully effective, the section further provided that it
" may be brought in the circuit court of any circuit, and all
. . . parties may be made defendants in one suit;" (!)
"decrees may be entered and enforced against any one or more
parties defendant without awaiting the final determination of the
cause against other parties;" (!) "the court . . . may make
such orders and decrees and issue such process as it shall deem
necessary to bring in new parties or the representatives of par-
ties deceased, or to carry into effect the purposes of [the] act ;"
" writs of subpoena may be issued by [the] court against any par-
ties defendant, which . . . shall run into any district;" (!)
and the laws of the United States providing for proceedings in
bankruptcy shall not be held to apply to said corporation."
Future difficulties were anticipated by provisions that (i) "No
dividend shall hereafter be made by [the Union Pacific] com-
pany but from the actual net earnings thereof ; (2) . . . no
new stock shall be issued, or mortgages or pledges made on the
property or future eafnings of the company without leave of
Congress, except for the purpose of funding and securing debt
now existing or the renewals thereof ;" (3) " no director or
officer of said road shall hereafter be interested ... in any
contract therewith except for his lawful compensation as such
officer ; (4) any director or officer who shall pay or declare, or
aid in paying or declaring any dividend, or creating any mort-
gage or pledge prohibited by this act, shall be punished by
imprisonment not exceeding two years, and by fine not exceed-
ing five thousand dollars; (5) the proper circuit court of the
United States shall have jurisdiction to hear and determine all
cases of mandamus to compel said Union Pacific Railroad Com-
pany to operate its road as required by law." Such another
example of special legislation, or edict, cannot be found in

CREDIT MOBILIER. 193

the statute books of the United States — to such an extremity did
the members of Congress conceive the nation to have been
driven in its efforts to control its corporate creature. The whole
trouble was in the puerile and improvident legislation "of 1862
and 1864.

Under the statute, suit was brought by the Attorney General
against one hundred and seventy defendants in the Circuit Court
for the District of Connecticut, but a demurrer to the complaint
of the United States was sustained and the case went the way of
all Pacific railway litigation, to the Supreme Court. Again the
demurrer was sustained, and the United States subjected to the
humiliation of being instructed that they had no cause of action
against the defendants ; the extraordinary provisions (some of
them undoubtedly unconstitutional) of the act of 1873 ^^^ been
imposed upon the Federal courts to no purpose.

The Circuit Court (Justice Hunt on the bench) held that the
United States could not maintain an action for the recovery from
the Union Pacific of money or other property even fraudulently
or unlawfully taken from the corporation, as long as the security
of the United States for its loan of bonds and land should not be
impaired, and as long as the corporation should perform the
public functions imposed upon it by its charter ; improvident
and fraudulent contracts by the Union Pacific were of no concern
to the United States, unless they should result in the impairment
of the government's security for its debt, or the non-performance
of its public functions ; in such event, the remedy would be by a
proper proceeding for the forfeiture of the corporation's charter.
In securing the benefits expected from a Pacific railway, the gov-
ernment had given no more than it agreed to give, and the cor-
poration had done and was doing all that the law required. If
anyone had a right to complain that the Credit Mobilier, by
fraudulent manipulations, had robbed its other self, the Union
Pacific, it was only a stockholder of the Union Pacific (!) or a
creditor whose security was directly affected by the fraudulent
manipulations. (!) " If any person has subscribed for capital
stock, or received capital stock or shares in the Union Pacific
13

)

194 THE UNION PACIFIC RAILWAY.

Railroad Company which have not been paid for, the action to
recover the money payable by the terms of the subscription must
be in the name of the corporation. The contract was made with
the corporation, as an existing person ; the money, if due at all,
is, in terms, payable to the corporation as such. In law it must
be recovered by the corporation, to be applied by it to the legal
necessities of the railroad company. In substance and in form
the money must go through and to the corporation, and no cred-
itor, legal or equitable, can maintain an action for its money. In
certain cases, if the corporation refuses to doits duty, such action
may be maintained by the shareholders of the corporation, the
corporation being made a party defendant. There may also be
a case in which a judgment creditor can maintain an action
against his judgment debtor and his creditor, to collect his debt
after his legal remedies are exhausted. . . . That, however,
is not the present case. The debt of the United States has not
yet matured. Its bonds, issued to the railroad company, have not
becouie payable, and their payment, when they mature, is secured
by a specific lien upon the road and its franchises." The Union
Pacific was not a trustee for the expenditure of public means in
public improvements and accountable to the government as such,
but was merely a debtor of the government bound only to the
performance of such public duties as its charter imposed. The
Union Pacific " is chartered for private benefit as well as for
public advantage, and is legally bound to administer its affairs
for the public advantage only to the extent that it does not vio-
late the provisions of its charter or the law of the land. With
this limitation such corporations are authorized to manage their
own affairs for their own benefit, and such is the understanding of
the government which grants such charter, and of the individ-
uals who accept it. If, in this respect, a corporation should fail
in its duty, the remedy is not by an attempt to enforce its sup-
posed duties to the public as a trust, but to punish its illegal acts
by a forfeiture of its charter. . . . No trust is declared in
[the] title [of the Act of 1862] or in the sections of the act in
which [the] aid is extended. . . . Not only is no trust

CREDIT MOBILIER. 195

expressed, but an idea thereof is excluded by taking a mortgage
upon the road, the telegraph, its property, franchises, and all its
granted lands remaining unsold. The government does not
rely upon the security of an uncertain and undefined trust, but
takes an express mortgage, where it intends to secure to itself the
performance of conditions by the.company. . . . It is appar-
ent to the most superficial reader of the statutes that the great
object of Congress was to bestow advantages, and from time to
time to increase gratuities, to a corporation which should under-
take the completion of a railroad to the Pacific. Conditions,
restraints, or trust were but little thought of. . . . The grants
of land and the issuance of bonds are to be considered as gifts,
gratuities, voluntary contributions to aid in the construction of
works which it is supposed would develop the resources of the
country, advance its civilization and improvement, and upon
which the mails and munitions of war could be transported.
When given and accepted, the power of the donor is at an end,
and the absolute ownership is in the corporations. The position
of the government is that of a donor and not of a creditor or a
cestui que trusty except where such position is directly specified.
Voluntary conveyance creates no presumption of a trust. . . .
The rights of the government are those which are expressly
reserved, and do not arise from an implied trust." — ,

In affirming the decision of the lower court in October, 1878, 1
the Supreme Court (Justice Miller delivering the opinion) said :
" It is difficult to see any right which as a creditor the govern-
ment has to interfere between the corporation and those with
whom it deals. It has been careful to protect its interests in
making the contract, and it has the right which that control
gives. What more does it ask?" .... "A court of justice
is called on to inquire not into the balance of benefits and favors
on each side of this controversy, but into the rights of the parties
as established by law, as found in their contracts, as recognized
by the settled principles of equity, and to decide accordingly.'"

' United States vs. Union Pacific Railroad Company et al., 98 U. S. R. 569.
Justices Swayne and Harlan dissented, except as to the question of the consti-
tutionality of section IV. of the Act of March 3, 1873.

THE UNION PACIFIC RAILWAY.

Such was the inglorious ending of the Credit Mobilier sensa-
tion, an object lesson of the abuses in the building of railways in
the United States in the fourth and fifth decades of their devel-
opment, of the imperfections of the methods of Congress in per-
forming its public duties, and worst of all, of the weakness of a
republican form of government.

IV.

The ordinary observer saw in the peculiar operations of the
Credit Mobilier only a fraudulent scheme by a corrupt ring for
private enrichment at the expense of the public. He saw only
the quivering leaf, — he saw neither the roots of the tree nor the
wind that agitated the leaf ; the first were concealed from him,
the latter was too subtle for him to perceive.

The Credit Mobilier scheme, though peculiar, was neither new
nor uncommon ; instead of standing alone as an example of the
Y perfidy of particular men, it was only a type of the railway con-
struction company of the period from i860 to 1880. Oakes Ames
was not the shrewd swindler that he is often depicted. He was
blunt, honest, and straightforward, did not create conditions, but
took them as he found them and made his actions fit them. All
the parts of the Pacific railway were built under the Acts of 1862
and 1864 in the same manner as the Union Pacific, by construc-
tion companies, controlled by the stockholders of the railway
companies, through which, by hiring themselves at exorbitant
rates to build their own lines, they enriched themselves at the
expense of the railways and the public taxed to support them.
And of the Union Pacific and Central Pacific it must in justice
be said, that of all the parts of the contemplated system, the
Union Pacific Company, though most villified, has come nearest
to the fulfillment of the purposes of its charter, with the least
abuse of the mechanism of its construction company. Most of
the trunk lines of the United States have been built in the same
way, and if the Credit Mobilier was a most iniquitous instrument
of industrial development, it simply means that the system of
railway building from i860 to 1880 was iniquitous, and not that
Oakes Ames was an arch villain among men.

CREDIT MOBILIER.

197

-7

Such an exaggerated estimation was put on railway bonds in
the period during and following the Rebellion that it was no
difficult matter to bond a railway for more than it was worth. A
large part of the insane confidence that was reposed in the unim-
proved public land of the United States in Jackson's administra-
tion after 1830 and resulted in the panic of 1837, was bestowed
on railways after i860 and intensified the panic of 1873. The
value of railways as property for present use and management
was not highly regarded, but their value as future investments, /

after they had developed a tributary territory, made their bonds^ /

readily salable abroad as well as in the United States. In the
east, railways had become valuable property, paying dividends
and interest on bonds with agreeable regularity. In the west,
they were expected to soon become remunerative. The railway
bonds and the interest on them were payable before dividends on
stock, and were usually secured by a mortgage on a land grant
donated by the government as well as on the income and fixed
property of the corporation ; it is no wonder that they found
ready sale as investments. Moreover, they had much resemblance
to government securities ; the railways did not appear, at first
blush, to be dependent on the efforts of individuals, but rather on
the condition of the tributary country, and their income was quite
similar to the taxes paid to the government. The investor in
railway bonds seemed to be putting his faith not in a Vanderbilt
or Gould, but in the manufacturers, farmers, producers and con-
sumers of the tributary territory upon which the roads depend.ed
for their success. The autocratic influence of " railroad man-
agers " had not been appreciably exerted. The disastrous results
of competition and " rate wars" had not yet been felt. If a rail-
way could not pay the interest on its bonds, rates could be
increased, and if it could pay the interest on its bonds, it could
by a little more pressure on the tributary territory be made to pay
some interest even on stock or more bonds. Thus the value of
railways came to be determined not by the expense of building
them, but by the amount of bonds and stock that their tributary
territory could carry ; if bonds were at a high premium and stock

19^ THE UNION PACIFIC RAILWAY.

should be paying a high rate of dividends, enough water was put
into the capital of the company to make returns normal, by build-
ing branch lines and over-capitalizing them, by issuing stock divi-
dends, or by some of the many other methods of stock-watering.
The railway builder, urged on by the people whose towns, factories
and farms would be benefited by increased facilities of transpor-
tation, soon found, shrewdly enough, that he could usually build
his road from the bonuses of the future patrons of the road, and
the proceeds of the bonds that eastern investors, encouraged by
glittering reports of the communities through which it was to
pass, would invest in ; then he would have the stock of the road
and the privilege of operating it for the profit of his venture ; if
the road should be prosperous, his stock would be valuable ; if
not, he could at least contrive by some means to declare a divi-
dend or two and unload his stock. The easiest and neatest
method by which the railway projector could put water into the
capitalization of his road was by hiring himself to build it ; the
road would then appear to have really cost the amount at which
it might be capitalized, and the bondholder would have a plausible
reason to believe that his security was of actual value. Such a
system of deriving profit from railways was regarded, with some
degree of justice, as being fully as defensible as getting a gov-
ernment contract at as high rates as possible and then performing
it as cheaply as possible, or as buying a stock of clothing as
cheaply as possible and selling it as dearly as possible. The only
safeguard the political economist and legislator of 1870 could
find was in the principle of competition, by which, if one railway
taxed its tributary community too heavily to pay interest and divi-
dends on excessive issues of bonds and stock, another railway
would compete with it for its traffic ; hence, it was assumed, rail-
way builders would, from prudential motives, refrain from exces-
sive issues of bonds and stock. The railways in the United States
have been making economic history so fast that the political econ-
omist has hardly had time to discover a principle at the basis of
one phase of their development, before another phase of develop-
ment has shattered the already "established" principle and given

CREDIT MOBILIER. 199

the aching brain of the economist another set of effects for which
to discover causes. Nothing is so little understood, even to-day,
as the economic development of railways in the United States.
When Congress attempted to encourage the construction of the
Pacific railway in 1862 and 1864, it blundered and groped about
until it enacted laws that were fundamentally out of harmony with
economic conditions. It expected a large body of patriotic citi-
zens to buy shares in the Union Pacific, and to the money derived
from the sale of stock the government would add a liberal bonus
of land and bonds ; then if such amount should not be sufficient
to build the road, the company might issue enough first- mortgage
bonds (not exceeding in amount the bonus of the government)
to complete the project. A philanthropic scheme, indeed, by.
which patriotic capitalists and shareholders might provide their
country with a Pacific railway and then wait for dividends on
their stock as a reward for their patriotism ! That may be the
principle on which Congress makes laws, but it is not the princi-
ple on which, since i860, capitalists have built railways, contrac-
tors have erected l)uildings, and clothing merchants have dealt in
coats and socks in this laissezfaire, competitive period of economic ^-nC^
refinement. The question that Oakes Ames and his associates
put to themselves was, Will the proceeds of the sale of first-
mortgage bonds and government bonds build the Union Pacific,
and leave a possible surplus and stock to distribute as our profits?
Indeed, that was the question that any railway projector would
have asked himself between i860 and 1870, and even to-day the
question would be modified but little. The answer was finally in
the affirmative, and the ordinary machinery of a construction
company was put into operation, as might have been expected
anywhere outside of Washington. Indeed, Congress, state legis-
latures, and the people did not count the cost of a Pacific railway ;
the railway was what they wanted, no matter what the cost might
be. Congress thought, until otherwise instructed by the Supreme
Court, that the Union Pacific promoters were the agents and trus-
tees of the government, inspired by the highest motives of patriot-
ism to build the national^ighway, — they were only men of the

200 THE UNION PACIFIC RAILWAV.

nineteenth century, building a railway just as other men built
railways, and making all the profit they could from the venture.
If the Pacific railway had not been thus built, it probably would
not have been built at all under the Acts of 1862 and 1864 ; the
system was iniquitous, and the business communities of to-dav are
paying excessive taxes in fares and freights for the industrial fol-
lies of the preceding generation ; the system will pass away, just
as the private banking system has passed away, and just as pro-
tection and stock gambling boards of trade will pass away as
mists before the rays of economic enlightenment. Oakes Ames
did not create the Credit Mobilier, or Nicholas Biddle the Bank
of the United States : industrial society created them both, and
Ames and Biddle simply fitted their engines to the groove that
I society made for them. The scheme contemplated by the Acts of
^^^^^1862 and 1864 was as much out of harmony with the economic
conditions of its day as the system of the London goldsmiths of
the sixteenth century would be out of harmony with the condi-
tions of the present financial world.

Congress legislates least on national subjects. The several
parts of the country are so different that laws suited to one are
seldom suited to all the others. Senators and representatives
represent their constituencies and business interests and not the
nation. The only constituency without representation in Wash-
ington is the United States. It is of minor practical importance
whether protection is a national benefit ; it is of the greatest
moment that the agriculturists of the South and West do not
favor it, while the manufacturers of New England and the Middle
States insist that it is the blood of their industrial body. What
a member of Congress may consider the best kind of money for
his country depends on the location of his constituency, whether
it is full of importers and the creditor class, of Western farm-
mortgage debtors, or of silver miners. Legislation on banks is
left largely to the bankers and capitalists in Congress ; the erec-
tion of a public building in Chicago, Philadelphia, or Kokomo
will be left in the care of the congressmen and senators inter-
ested in those cities, the national necessity of the building is,

CREDIT MOBILIER. 20

,K^

within limits, a matter of secondary consideration. Pacific rail-
way legislation was nearly always in charge of California and
Nevada members, and the Central Pacific had no lack of
"** friends;" the senators and representatives from California had
long been elected with special reference to securing government
aid for a Pacific railway. With the Union Pacific the case was
somewhat different ; it had not the crystallized sentiment of a
district behind it, and the Kansas Pacific developed into a com-
petitor. Oakes Ames had learned from congressional experi-
ence that even proper legislation for banks, factories, sheep
raising and agricultural pursuits, could only be obtained by

the active advocacy of bankers, manufacturers, sheep raisers,^

and farmers in Congress. The Union Pacific was assailed by I
enemies without and enemies within ; blackmailing government
commissioners, stock jobbers, and shareholders were pouncing
on the Union Pacific and Central Pacific at every turn ; the
stock market was continually agitated by threats of hostile legis-
lation or litigation. Truly the Union Pacific was in need of
" friends." Oakes Ames again took conditions as he found them,
and made his actions accord with them ; he sold Credit Mobilier
stock to members of Congress, so that they would take an inter-
est in the project of the Union Pacific, just as members from
Pennsylvania took an interest in the protection of the iron
industry, bankers from New York and Boston, in banking laws
and bond-interest laws, and members from California and Nevada,
in the Central Pacific. " We want more friends in this Congress,
and if a man will look into the law (and it is difficult for them to
do it unless they have an interest to do so), he cannot help being
convinced that we should not be interfered with." ' The con-
demnation of Ames in Congress was the echo of the condemna-
tion by a thoughtless, inconsistent democracy, of the principle
of divided responsibility, of checks and balances, of the prin-
ciples of a republican form of government, in which the parts
have interests distinct from and paramount to the interest of the
whole, and in which the interests of the parts and of the whole

* Third letter from Oakes Ames to II. S. McComb, page 176, supra.

202 THE UNION PACIFIC RAILWAY.

are less often in harmony than in opposition. The result of the
Credit Mobilier investigation is degrading. The evidence taken
by Poland and his committee did not convict Ames of bribing,
or Brooks of being bribed. The report had found that Ames
had been guilty of bribery, but that no one had been bribed.
Members, it seemed, had been bribed without knowing it, and
Ames had bribed them without telling them what he expected
them to do in return for their bribes. It was a most miserable
effort to appease public clamor by offering up to" it the two
most convenient victims. Ames and Brooks were both old men
(both died within a few months after the end of the session),
practically out of politics, and were not reelected to serve after
the term of Congress at the end of which the Credit Mobilier
investigation culminated. One was a Democrat, the other was a
Republican. They were simply made scapegoats for the con-
gressional application of the logic of a republican form of
government. The " friends " of the Central Pacific, of class
legislation for the benefit of bankers and iron and woolen man-
ufacturers, and of a Salary Grab Act for their own benefit,'
sitting in condemnation of Ames and Brooks, afford an inter-
esting spectacle of " Satan rebuking sin."

' The so-called " Salary Grab Act " was passed within ten days after the
condemnation of Ames and Brooks.

CHAPTER VII.

THE THURMAN ACT.

The Union Pacific was born under an evil star. Internal
dissensions made it an outcast in the financial world until the
fall of 1867. As soon as it was generally known that it was to be
a success and that its builders were to derive large profits from
its construction and future operation, blackmailers, stock jobbers,
and plunderers pounced upon it at every turn. One Cornelius
Wendell, a government commissioner for the examination of com-
pleted sections of road, set the pace by refusing to approve a sec-
tion of forty miles of road unless he should be paid $25,000.00 ;
as the delivery of government subsidy bonds depended upon the
approval of the completed section and delay would be ruinous to
the company, the ransom was paid. McComb's exploit has
already been detailed. James Fisk, in the fall of 1867, gained
the control of some Union Pacific stock and was threatening the
company with destruction unless he should be financially induced
to restrain himself. In spite of the treaty made between the
Durant and Ames factions, hostilities had been renewed, and the
attempt of the latter to gain control of the directory of the Union
Pacific at the annual election in October, resulted in injunctions
that prevented an election. Fisk had the notorious Judge Bar-
nard ready in New York at any time to make judicial orders to
his liking, and the Ames faction wanted the office of the company
removed from New York. A joint resolution introduced by
Dawes in the House in December, 1867, provided that the time
of the annual meeting of stockholders and election of directors
should be changed from October to March, and that at each

meeting the place of the next annual meeting and election should

203

204 THE UNION PACIFIC RAILWAY.

be designated.' But when an attempt was made to hold a meet-
ing; and elect directors in March, 1868, proceedings were stopped
by an injunction, and the directors elected in 1866 continued to
hold over. Then the company appealed to Congress again foi
protection from Fisk and his New York judges. An act fathered
by Bingham (Ohio), aiming to remove the general office of the
company from New York and to deprive the state courts of New
York of jurisdiction over the company, passed the House without
debate in March, 1869, after another attempted meeting and

flourish of injunctions ;' but when it reached the Senate, a vigor-
ous attack was made on it by Stewart in the interest of the Cen-
tral Pacific, whose Nevada " rotten borough " he represented.
The two roads were so nearly completed, that only about one
hundred miles intervened. The Central Pacific had not reached
Promontory Point from the west ; the Union Pacific, however,
had passed Ogden from the east, though the Central Pacific had
filed its map, graded its roadbed to a point several miles east of
Ogden, and received two-thirds of its subsidy bonds from the
government. The Central Pacific wanted the junction point at
Ogden, so as to be able to participate in the Salt Lake valley
traffic and reach a supply of coal ; the Union Pacific wanted to
control both, and keep the Central Pacific out. The purpose of
Stewart's attack on Bingham's very reasonable resolution was to
coerce the designation of Ogden as the junction point. In the
course of debate Stewart roundly denounced the Credit Mobilier
and Seven Trustees, and asserted that the Union Pacific road had
not been built according to law. As a result of this attack, the
Senate tried to perform the duties of a court by settling the rights

* The joint resolution required that the place should be one of the cities of
New York, Washington, Boston, Baltimore, Philadelphia, Cincinnati, Chicago
and St. Louis.

'At this time, under an order of court, the offices and vault of the Union
Pacific in New York were broken open by force, and an effort made to obtain
possession of the books and records and other property of the company ; a large
number of bonds were lost in the excitement of the occasion, it is said, and
coold never afterwards be located ; the books and records were taken by
&ith across the Hudson into New Jersey.

THE THURMAN ACT. 20$

of the two corporations as to junction point, and Garrett Davis
(Kentucky) proposed an amendment for an investigation of the
Union Pacific that the Senate could not refuse to adopt, though it
did not reflect the matured intention of the body. Then it was
stated on the floor that the two companies had compromised their
differences, and the three-headed resolution was passed. The
House promptly concurred in the amendment of the Senate. In its
final form, the resolution provided, (i) that the stockholders of
the Union Pacific might elect a board of directors at a meeting to
be held on the 2 2d day of April, 1869, and establish their general
office at any place in the United States to be designated at that
meeting,' (2) that ** the common terminus of the Union Pacific
and Central Pacific Roads should be at or near Ogden ; and the
Union Pacific Railroad Company shall build, and the Central
Pacific Railroad Company pay for and own the road from
the terminus aforesaid to Promontory Summit, at which point
the rails shall meet and connect and form one continuous line,"
(3) that the President of the United States should appoint
a commission of not more than five disinterested "eminent citi-
zens " to examine and report the condition of the two roads and
what sums should be necessary to complete them as " first class
roads," 3 (4) that the President should withhold from the two
companies enough bonds to insure the " full completion " of the
roads, and if the amounts still to be issued to them should not
be sufficient for that purpose, that " he should * make requisition '
upon them for the deficiency, and in default of obtaining such
security as [is] in this section provided, the President may
authorize and direct the Attorney General to institute such suits
and proceedings on behalf and in the name of the United States,

' Under this section, the general office was removed, in 1869, from New
York to Boston, at which latter place it has since remained.

"By the Act of May 6, 1870, (16 Statutes, 121 -122) the terminus was
more definitely ascertained by the designation of particular sections (about
five miles northwest of the station at Ogden) within the limits of which the
terminus should be. (Supra, page 152).

3 For proceedings under this section, see pages 156-158, supra.

206 THE UNION PACIFIC RAILWAY.

in any court of the United States having jurisdiction, as shall be
necessary or proper to compel the giving of such security, and
thereby or in any manner otherwise, to protect the interests of
the United States in said road, and to insure the full completion
thereof as a first class road, as required by law and the statutes in
that case made,"' and (5) " that the Attorney General ....
investigate whether or not the charter and and all the franchises
of the Union Pacific Railroad Company and of the Central
Pacific Railroad Company have not been forfeited, and institute
all necessary and proper legal proceedings ; whether or not the
said companies have or have not made any illegal dividends upon
their stock, and, if so, [that he] institute the necessary proceed-
ings to have the same re-imbursed, and whether

any of the directors, or any other agents or employes of said
companies, have or have not violated any penal law, and, if so,
[that he] institute the proper criminal proceedings against all
persons who have violated such laws."''

The joint resolution, as originally introduced by Bingham,
and passed by the House, had aimed to deprive the state courts
of the powers over the Union Pacific that had been so effectively
brought into action by Fisk, but that feature had been expunged
by the Senate ; the purpose was accomplished later, however, by
an anomalous section tacked to " An Act supplementary to an
Act entitled ' An Act to allow the United States to prosecute
Appeals without giving security ' and for other purposes," which

provided " that any corporation other than a

banking corporation, organized under a law of the United States,
and against which a suit at law or in equity has been, or may be,
commenced in any court other than a Circuit or District Court

of the United States, for alleged liability of such

corporation, may have such suit removed from

the court in which it may be pending, to the proper Circuit or

' For proceedings under this section, see pages 157-159, supra.

* This provision (5) was a nullity as to practical results ; indeed, it was
never intended to be enforced ; it is one of the many examples showing the
peculiar ** fault finding " spirit Congress displayed towards the Pacific railway.

THE THURMAN ACT. 20/

District Court of the United States/'' Though this remarkable
provision is general in its terms, the Union Pacific is almost the
only corporation in the United States to which its description
applies ; it was enacted for the express benefit of that corporation.
Thus ended the " Fisk raid."

Even before the Union Pacific had completed its line to
Ogden, it began to have trouble with the public over the question
of rates. Passengers were charged ten cents a mile, and freight
rates were so high that the people of Fremont declared they could
get goods to and from Omaha (forty miles) cheaper by wagon
road than by rail. Complaints reached Washington, Nebraska
newspapers clamored, and eventually Congress interfered. In
December, 1867, C. C. Washburn (Wisconsin) introduced in the
House a bill for the regulation of rates, but it was referred to the
Committee on the Pacific Railroad and appeared likely to remain
in its hands ;' appreciating the situation, he then attempted to
introduce a joint resolution for the same purpose in January, 1868,^
but by a technicality in the rules, he could not introduce it himself,*
Dodge (Iowa)s objecting, and had Windom (Minnesota) introduce
it for him ; then its course was further obstructed by the demand
of Higby (California) for an opportunity to debate it. February
17, 1868, another effort was made, and the same joint resolution
was again introduced by Washburn ; it provided that the Secre-
tary of War, the Secretary of the Interior, and the Attorney Gen-
eral . ... are hereby constituted a Board of Commis-
sioners, whose duty it shall be, on the first of July in each and

' 14 Statutes, 226.

' Oakes Ames was the principal member of the Committee on the Pacific
Railroad.

3 One of these is supposed to be the " Washbume's move," referred to by-
Ames in one of his letters to McComb, page 176, supra.

* According to the rule, he could introduce only one resolution when his
state was called, and he had already introduced one on another subject.

s Granville M. Dodge was chief engineer of the Union Pacific, and a mem-
ber of the House from Iowa, while his wife was a stockholder in the Union
Pacific and Credit Mobilier.

208 THE UNION PACIFIC RAILWAY.

every year, to fix and establish a tariff for freight and passengers
over the Union Pacific and Central Pacific railroads and their
branches, which tariff shall be equitable and just, and shall not
exceed double the average rates charged on the lines of railroad
between the Mississippi River and the Atlantic Ocean on parallels
of latitude north of Saint Louis, Missouri ; and the said railroad
companies shall not charge a sum in excess of the rates fixed by

said board, nor make any contract to give terms

and privileges to any express company which are denied to any
other express company.** Dilatory tactics were again resorted to,
and though the resolution was reached twice in March, 1868, it
was finally referred to the Committee on the Pacific Railroad (!)
on March 26, where the bill first introduced had been repos-
ing since the beginning of the session. However, the resolution
was reported back in a few days with a proviso that it should not
take effect until the road should be completed.^ The proviso was
rejected by a vote of 75 to 48 (66 not voting) and the resolution
was finally passed May 12. When it reached the Senate, it
went, by reference, to the Committee on the Pacific Railroad, and
never emerged. After the line was completed, the companies
voluntarily reduced their rates, and further trouble was avoided.

II.

In 1870 arose the so-called "interest question.'* As to the
repayment to the United States of the amount of subsidy bonds
advanced to the Pacific railroads, the Act of 1862 (Section 5)
provided, "To secure the repayment to the United States . . .
of the amount of said bonds so issued and delivered to said com-
pany, together with all interest thereon, which shall have been
paid by the United States, the issue of said bonds and delivery
to the company shall ipso facto constitute a first mortgage,"' etc.

» See pages 156-160, supra, as to question of the time of completion. See
also provision of Act of 1862 as to regulation of rates after the completion of
the road, page 106, supra.

"Supra, page 106.

THE THURMAN ACT. 209

The act further (Section VI.) provided, " The grants [of bonds
and land] are made upon condition that said company shall pay-
said bonds at maturity and all compensation for

services rendered for the government shall be applied to the
payment of said bonds and interest until the amount is fully

paid and after said road is completed, until said

bonds and interest are paid, at least five per centum of the net
earnings of said road shall also be annually applied to the pay-
ment thereof." The Act of 1864 (Section V.) provided that " only
one-half of the compensation for services rendered for the
government by said companies shall be required to be applied
to the payment of the bonds issued by the government." The
interest on the bonds was paid regularly by the United States, of
course, but no percentage of the net earnings was paid by the
companies' and the "half compensation" amounted to less than
the interest on the bonds;' thus the amount of the indebtedness
of the railway companies was increasing each year, and as the
Indian problem was practically solved, and the consequent ex-
penses of army transportation decreased, the annual increment
of debt was likely to be greater. What was to be done?

A joint resolution, offered May 2, 1870, by Representative Van
Trump (Ohio), and instructing the Secretary of the Treasury to
retain all the compensation for services for the government to
apply on account of the interest paid on the government bonds,
was referred to the Committee on the Pacific Railroad with the
usual result that it appeared likely to remain in their hands in-
definitely. A demand on each company for its deficit of interest
was met in each case by the answer that the interest was not pay-
able (except by half compensation and percentage of net earn-
ings) before the maturity of the bonds. The Secretary of the

* Infra, pages 212-214.

'Up to July, 1870, the excess of accumulated interest over payments of half
compensation by the several companies was as follows : Union Pacific, $2,543,-
987.81; Central Pacific, ^8^3,326,834.45; Western Pacific, $137,798.97; Sioux
City and Pacific, $203,470.14; Kansas Pacific, $569,261.65; Central Branch
Union Pacific, $320,210.84; total, $7,101,563.26.

210 THE UNION PACIFIC RAILWAY.

Treasury (George S. Boutwell) did not wait for instructions from
Congress but acted on his own responsibility ; he obtained an
opinion from Attorney General Akerman in December, 1870,
"that the government may lawfully claim from the company the
amount of the interest in question as soon as such interest is paid
by the government," and accordingly withheld from the com-
panies all compensation for services for the government, to apply
on the reimbursement of interest. Then the Senate Committee
on the Judiciary, having been instructed to inquire and report, (i)
whether the companies were bound to reimburse interest paid by
the government on its bonds before the maturity of the prin-
cipal,' and (2) whether the Treasury Department had the right to
retain all the compensation for services for the government to
apply on said interest,' reported in the negative on each point
(except as to half compensation and percentage of net earnings).^
On the strength of the report. Congress tacked to the Army
Appropriation bill of March, 187 1, an instruction to the Secre-
tary of the Treasury to pay over to the companies the half com-
pensation withheld, with a proviso, however, that the payments
should not affect the legal rights of the government or the obli-
gations of the companies.

In the Legislative Appropriation Bill of March, 1873, ^ow-
ever, the wave of hostility occasioned by the investigations of the
Wilson committee into the relations of the Union Pacific and
Credit Mobilier* was responsible for a provision directing the
Secretary of the Treasury to retain all compensation for services
for the Government up to an amount such as, in addition to the
five per cent of net earnings, would liquidate the balance of inter-
est not reimbursed ; but the same provision permitted the com-
panies to bring suits against the government for their withheld

' Resolution' by Edmunds (Vermont).
" Resolution by Thayer (Nebraska).

3 The committee was composed of five members, of whom three (particu-
larly Carpenter, who presented the report) favoied the report, and two (particu-
larly Edmunds) were opposed to it.

4 Supra, pages 177-196.

THE THURMAN ACT. 211

half compensation in the Court of Claims, with a right in either
party to appeal to the Supreme Court, and precedence of hearing
in both courts over all other business. Suit was brought by the
Union Pacific in the Court of Claims and the position of the com-
panies was upheld. An appeal by the government to the Supreme
Court resulted in an affirmance of the decision of the Court of
Claims in the fall of 1875.

In delivering the decision of the Supreme Court, Justice Davis
reviewed exhaustively the history of the Acts of 1862 and 1864 in
order to ascertain their "reason and meaning," and the obliga-
tion created by them as to the payment by the companies of the
current interest. "This enterprise was viewed as a national under-
taking for national purposes, and the public mind was directed
to the end to be accomplished rather than the particular means
employed for the purpose. Although this road was a military
necessity, there were other reasons active at the time in produc-
ing an opinion for its completion besides the protection of an
exposed frontier. There was a vast unpeopled territory lying
between the Missouri and Sacramento Rivers which was practically
worthless without the facilities afforded by a railroad for the trans-
portation of persons and property. With its construction the
agricultural and mineral resources of this territory could be devel-
oped, settlements made where settlements were possible, and
thereby the wealth and power of the United States essentially
increased. And there was also the pressing want, in times of
peace even, of an improved and cheaper method for the transpor-
tation of the mails and supplies for the army and the Indians.

" It was in the presence of these facts that Congress undertook
to deal with the subject of this railroad

" It was a national work, originating in national necessities,
and requiring national assistance

" The policy of th# country, to say nothing of the supposed
want of power, stood in the way of the United States taking the
work into its own hands. Even if this were not so, reasons of
economy suggested that it were better to enlist private capital
and individual enterprise in the project. This Congress under-

212 THE UNION PACIFIC RAILWAY.

took to do, and the inducements held out were such as it was
believed would procure the requisite capital and enterprise. But
the purpose in presenting these inducements was to promote the
construction and operation of a work deemed essential to the
security of great public interests

" [Congress] well knew that the undertaking of the govern-
ment bound it to pay to the holder of any bond, interest every
six months, and the principal at the time the bond matured.
With this knowledge, dealing as it did with the relations the com-
pany were to bear to the government on the receipt of these
bonds, had it intended to exact of the company the payment of
interest before the maturity of the bonds, it would have declared
its purpose in language about which there could be no misunder-
standing The provisions [of the acts] created no obliga-
tion to keep down the interest, nor were they so intended

It was in the discretion of Congress to make this requirement.
.... This Congress did not choose to do, but rested satisfied
with the entire property of the company as security for the ulti-
mate payment of the principal and interest of the bonds delivered
to it, and in the meantime, with special provisions looking to the
reinbursement of the government for interest paid by it, and the
application of the surplus, if any remained, to discharge the princi-
pal Besides, it is fair to infer that Congress supposed

that the services to be rendered by the road tp the government
would equal the interest to be paid ; and that this was not an
unreasonable expectation, the published statistics of the vast cost
of transporting military and naval stores and the mails to the
Pacific coast, by the ancient methods, abundantly show

" There is enough in the scheme of the act, and in the pur-
poses contemplated by it, to show that Congress never intended
to impose on the corporation the obligation to pay current inter-
est."' #

III.

While the " interest question " was in the courts, the com-
panion question of the payment of the five per cent of net earn-

* United States vs. Union Pacific Railroad Company, 91 U. S. R. 72.

THE THURMAN ACT. ^ 2 1 3

ing^ received increased attention. The words of the statute of
1862 are: "And after the said road is completed, until said
bonds and interest are paid, at least five per centum of the net
earnings shall be annually applied to the payment thereof.'*'
Two questions were raised in determining- the amount due to the
government : (i) When was the road completed? (2) What
was meant by the term " net earnings?** (i) The government
claimed that the Union Pacific was completed in November,
1869; the company, in October, 1874.' In fact, part of the bond
subsidy and land grant had been withheld by the government
because the roads were not completed according to law. Yet the
Union Pacific and the Central Pacific had been operated over
their entire length since July, 1869. However, the companies
and the government maintained their separate views of the ques-
tion, and neither was entirely consistent. (2) In defining the
term " net earnings,** the companies insisted on determining
them by deducting from the gross earnings interest on bonded
indebtedness, expenses of land grant, new improvements and
equipment, and the government's half compensation — items that
the government insisted were part of the " net earnings,** and
ought to be paid out of them. By the Act of June 22, 1874, the
Secretary of the Treasury was directed to require the payment by
the companies of " all sums of money due, or to become due, the
United States for the five per centum of net earnings,** and " in
case .... said railroad companies shall neglect or refuse to
pay the sum within sixty days after demand therefor, .... the
Attorney General . . . . shall .... institute the necessary suits
and proceedings to collect and otherwise obtain redress in respect
of the same in the proper circuit courts of the United States.*'
Demand was made on each of the companies for the payment of
the amounts claimed, being computed on the earnings since 1869,^
but the demands met with no response. Suits were begun against
the several Pacific railway companies in the proper circuit courts

* Supra, pa^e 106.
'Supra, page 159.
3 Ibidem.

214 THE UNION PACIFIC RAILWAY.

and eventually reached the Supreme Court, where they were
decided in the October, 1878, term. The Court held (Justice Brad-
ley delivering the opinion) that the " net earnings" were to be
ascertained by "deducting from the gross earnings all the ordinary
expenses of organization and of operating the road, and expendi-
tures made bona fide in improvements, and paid out of earnings,
and not by the issue of bonds or stock, but not deducting inter-
est paid on any of the bonded debt of the company,"' nor the
government's half compensation.'

But before the " net earnings cases" were passed upon by
the Supreme Court, Congress seemed to tire of waiting for the
determination of the rights of the Pacific railway companies in
the courts and passed the Thurman Act, in May, 1878. Of all
the remarkable legislation on the Pacific railways, this act, under
which the government and the companies have plodded on to
the present (1894), is by no means the least remarkable.

IV.

After the decision of the Supreme Court on the " interest
case" in the fall of 1875, Congress became alarmed for the secur-
ity of the debt to the government of the Pacific railways. The
half compensation fell far short of the current interest on the
government bonds and the companies were refusing to pay the
five per centum of net earning ; on the most liberal calculations,
if they should pay the five per centum, the amount realized from

* Syllabus in Union Pacific Railroad Company vs. United States, 99
U. S. R. 402.

^ Union Pacific Railroad Company vs. United States, 99 U.S.R. 402 ; Uni-
ted States vs. Central Pacific Railroad Company, 99 U.S.R. 449 ; United States
vs. Kansas Pacific Railway Company, 99 U.S.R. 455 ; United States vs. Sioux
City and Pacific Railroad Company, 99 U. S. R. 491. In these cases it
was also decided — a point not very material in this connection — that the pri-
ority of the lien of the first mortgage bonds over the lien of the government
bonds " authorized the payment of the interest accruing on the [former] out of
the net earnings of the road, in preference to the five per centum payable to the
government, which [latter] is only demandable out of the excess in each year."
(Syllabus in Union Pacific Railroad Company vs. United States). Justices Strong
and Harlan dissented on this point in each case.

THE THURMAN ACT. 21 5

the two sources would be quite inadequate to reimburse the gov-
ernment for its payments of interest, not to speak of the principal
debt. The companies were laying by no means for the extin-
guishment of their debt to the government at its maturity, and in
1875, with apparent audacity (really as a business necessity) were
distributing their surplus earnings in dividends among their
stockholders. Popular condemnation seemed to be in store for
Congress unless something should be done at once, and Congress
had no desire for a repetition of the experience of the Credit-
Mobilier scandal. In each House, the Committee on the Pacific
Railroad was set to work ; as the relations of the companies with
the government were almost entirely matters of legal interpreta-
tion of the Charter Acts of 1862 and 1864, the two Committees
on the Judiciary were asked for recommendations. The compa-
nies, perhaps fearing more arbitrary legislation and always suf-
fering on the stock market from apprehensions of " what Con-
gress might do,'* were at one with Congress as to the necessity of
a " sinking fund" for the future payment of the debt to the gov-
ernment. The means with which the fund should be filled caused
the differences of opinion. The companies proposed to return the
unsold balance of their land grant (the best part having been
disposed of) to the government, and have the sinking fund cred-
ited with its value computed at-J>2.5o per acre, and to have it cred-
ited further with the amount due to the companies for services
and withheld by the government ; to these credits they proposed^
to add each year an amount sufficient to equal, at their maturity,
the amount due on the government bonds. All the amounts in
the sinking fund were to bear interest at six percent compounded
semi-annually, while simple interest was to be computed on the
government bonds. The propositions of the companies were
presented in the bills reported by the Committees on the Pacific
Railroad. The Committees on the Judiciary made exhaustive
reports accompanied by proposed bills ; the one proposed in the
Senate was called (from the chairman of the committee) the
" Thurman bill," and concerned only the Union Pacific Railroad
Company and the Central Pacific Railroad Company (the latter

2l6 THE UNION PACIFIC RAILWAY.

a consolidation of the original Central Pacific and Westerr
Pacific). Its discussion in the Senate was prolonged, and the
views of the constitutional lawyers among its members were
widely divergent. The bill, proposing " to alter and amend
the acts [of 1S62 and 1864,"] became law May 7, 1878, with the
following provisions :

"Net earnings . . . shall be ascertained by deducting
from the gross . . . earnings . . . the necessary ex-

•penses actually paid . . . in operating the [road] and keep-
ing the same in . , . repair, and the sum paid ... in
discharge of interest on . . . first -mortgage bonds . . .
and excluding all sums paid . . . for interest upon any other
indebtedness."

A sinking fund was established in the Treasury of the United
States, into which should be paid each year the one-half compen-
sation for government services payable by the act of 1864 to the
companies, together with such sum, not in excess of 8850,000.00
(in the case of the Union Pacific) or of $1,200,000.00 (in the case
of the Central Pacific), as added to the whole compensation for
government services and five per cent of net earnings, should
make them equal to twenty-five pet cent of the net earnings of
each company ; unless the remaining seventy-five per cent should
be "insufficient to pay the interest [on the first-mortgage bonds]
'. . . and such interest [should have] been paid out of such

.net earnings," in which case the Secretary of the Treasury [was]
authorized ... to remit so much of the twenty-five per
centum of net earnings required to be paid into the sinking fund
. . . as may have been thus applied and used in the payment
of interest as aforesaid." As requited by the Act of 1864, one-
half of the compensation for services for the government were
still to be applied directly on the payment of the bonds and inter-
est.' The sinking fund should be invested in (preferably five per

■This somewhat intricate provision caused much confusion in the debates
in Conj^reES. The amount paid on the government bonds and into the sinking
fund eouid not exceed twenly-live per cent of net earnings unless the twenty-
five per cent of net earnings should be less than the total compensation for

THE THURMAN ACT. 21/

cent) bonds of the United States, and the income should semi-
annually be likewise invested/ Dividends were prohibited as
long as either company should be in default of payment of
either the interest on its first- mortgage bonds, the contributions
to the sinking fund, or the five per cent of net earnings. Ille-
gally paid dividends might be recovered by suit and paid into
the sinking fund. "And every . . . officer, person, or stock-
holder who shall knowingly vote, declare, make, or pay any
such dividend, contrary to the provisions of this act, shall be
deemed guilty of a misdemeanor, and, on conviction thereof,
shall be punished by a fine not exceeding ten thousand dol-
lars, and by imprisonment not exceeding one year."

" Said sinking fund . . . shall ... be held for the
protection, security, and benefit of the lawful and just holders of
any mortgage or lien debts of [the] companies, . . . law-
fully paramount to the rights of the United States, and for the
claims of other creditors, if any, lawfully chargeable upon the
funds so . . . paid into said sinking fund, according to
their respective lawful priorities, as well as for the United
States, according to the principles of equity, to the end that all
persons having any claim upon said sinking fund may be entitled
thereto in due order ; but the provisions of the section shall

government services plus five per cent of net earnings ; nor could it exceed the
total compensation for government services plus five per cent of net earnings,
plus $850,000.00 (or jjJ 1, 200,000.00). There is an apparent incongruity in the
provision that if seventy-five per cent of net earnings should not be sufficient to
pay the interest on the first-mortgage bonds, part of the twenty-five per cent in
the sinking fund should be used for that purpose ; the amount of net earnings
is determined by deducting from the gross earnings the operating expenses and
interest on first mortgage bonds; the interest on the first-mortgage bonds is
paid before there are net earnings ; according to the definition of net earnings
in the act, interest on first-mortgage bonds could not be paid out of net earn-
ings in any case.

'By the Act of March 3, 1887, this provision was so amended that in addi-
tion to the five per cent bonds, the Secretary of the Treasury might invest the
sinking fund in any of the government bonds issued in aid of the Pacific rail-
ways or in their first-mortgage bonds, having priority of lien over the govern-
ment bonds. 24 Statutes, 488.

2l8 THE UNION PACIFIC RAILWAY.

not . . . impair the existing legal right ... of any
mortgage, lien, or other creditor of . . . said companies,
. . . . nor excuse [them] from the duty of discharging,
out of other funds, its debts to any creditor but the United
States."

" All sums due the United States from . . . said com-
panies . . . whether payable presently or not, and all sums
required to be paid to the United States or into the Treasury, or
into said sinking fund . . . are hereby declared to be a lien
on all the property ... of every description granted

. . by the United States to . . . said companies . .

. . and also upon all the estate and property, real, personal

and mixed, assets, and income of the .... companies .

. . . from whatever source derived, subject to any lawfully

prior and paramount mortgage, lien, or claim thereon.*'

"If either of said railroad companies shall fail to perform
. . . the requirements of this act and of the acts [of 1862 and
1864], and of any other act relating to said company, . . .
for the period of six months next after such performance may be
due, such failure shall operate as a forfeiture of all the rights,
privileges, grants and franchises derived . . . by it from the
United States.'*

" This act shall be subject to alteration, amendment or repeal,
. ._ . as justice or the public welfare may require. And
nothing herein contained shall be held to deny, exclude or impair
any right or remedv in the premises now existing in favor of the
United States.'"

' 20 Statutes, 56.

By the Act of June 19, 1878, the important office of Auditor of Railroad
Accounts was established as a bureau of the Interior Department, for the pur-
pose of attaining closer control of the government aided railways and promot-
ing the successful operation of the Thurman Act.

"The duties of [the] Auditor, under and subject to the direction of the Sec-
retary of the Interior shall be to prescribe a system of reports to be rendered
to him by the railroad companies whose roads are in whole or in part west,
north, or south of the Missouri River, and to which the United States have
granted any loan or credit or subsidy in bonds or lands ; to examine the books

THE THURMAN ACT. 219

Ca§es were soon made up in the Court of Claims and Circuit
Court for the District of California to test the constitutionality of
the Thurraan Act. They reached a decision* in the Supreme
Court in the fall of 1878, and the act was declared constitutional
so far as it provided for the establishment of a sinking fund (no
other question being necessarily raised). The Court (Chief Jus-
tice Waite delivering the opinion) held that the power to alter
and amend the Acts of 1862 and 1864 had been reserved by Con-
gress, and that the reserved power could be exercised by it so far
as the regulations imposed by it on the corporations were not
unreasonable or arbitrary, or destructive of vested rights. " It is
sufficient now to say that we think the legislation complained of
may be sustained on the ground that it is a reasonable regulation
of the administration of the affairs of the corporation and pro-
motive of the interests of the public and the corporators. It
takes nothing from the corporation or the stockholders which
actually belongs to them. It oppresses no one, and inflicts no
wrong. It simply gives further assurance of the continued sol-
vency and prosperity of a corporation in which the public are so
largely interested, and adds another guaranty to the permanent

and accounts of each of said companies once in each fiscal year, and at such
other times as may be deemed by him necessary to determine the correctness of
any report received from them ; to assist the government directors of any of
said railways in all matters which come under their cognizance ; . . . .
to see that the laws relating to said companies are enforced ; to furnish such
information to the several departments of the government in regard to tariffs
for freight and passengers and in regard to the accounts of said railroad com-
panies as may be by them required, or . . . as he may deem expedient for
the interest of the government ; and to make an annual report to the Secretary
of the Interior, . . . on I he condition of each of said railroad companies
their roads, accounts, and affairs. . . .

" Each and every railroad company aforesaid which has received from the
United States any bonds of the United States, issued by way ot loan to aid in
constructing or furnishing its road or which has received from the United
States any lands, granted to it for a similar purpose, shall make to the said
Auditor any and all such reports as he may require from time to time, and shall
submit its books and records for the inspection of said Auditor .... at any
time that the said Auditor may request." 20 Statutes, 169.

220 THE UNION PACIFIC RAILWAY.

and lasting value to its vast amount of securities/*' But the
decision was reached by a bare majority of the Court, Justice
Hunt not sitting, and Justices Bradley, Strong and Field dissent-
ing. Justice Bradley was of the opinion that " the power of Con-
gress, even over those subjects upon which it has a right to legis-
late, is not despotic, but is subject to certain constitutional limi-
tations. One of them is, that no person shall be deprived of life,
liberty, or property without due process of law ; another is that
private property shall not be taken for public use without just
compensation ; and a third is that the judicial power of the
United States is vested in the supreme and inferior courts, and
not in Congress. It seems to me that the law in question is vio-
lative of all these restrictions, of their spirit at least, if not their
letter; and a law which violates the spirit of the constitution is

as much unconstitutional as one that violates its letter

The case before us .... is a direct abrogation of a contract,
and that, too, of a contract of the government itself, a repudia-
tion of its own contract."

As a matter of abstract justice, it was perhaps right that the
Union Pacific and Central Pacific were required to make some
reasonable provision out of their surplus earnings for the pay-
ment of their debts, when due ; if that were not done, the United
States appeared likely to lose the greater part of their claim, as the
original property of the companies would be inadequate security,
and the accumulations would be dissipated in dividends ; if the
United States agreed that the interest of its loan should not be
paid before the maturity of the principal, because the enterprise
was regarded as unusually hazardous, and if afterwards it proved
very profitable, the companies ought not to have objected to lay-
ing by only one-fourth of their net earnings to pay their debts,
which otherwise would not be paid ; it is true, the government
and public were saving immense sums each year by the improved

* Sinking Fund Cases, Union Pacific Railroad Company vs. United States,
and Central Pacific Railroad Company vs. Gallatin, 99 U.S.R. 700. Compare
the decision in these cases with the decision in the " interest case," United
States vs. Union Pacific Railroad Company, 91 U.S.R. 72, cited supra, pages
211-212.

THE THURMAN ACT. 221

facilities of transportation, but that was merely an incident, and
would not justify a failure on the part of the companies to pay
their debt to the United States. The contract read that "at least
five per centum " of net earnings should be paid over each year, '
but the fair implication that more than five per centum might be
required was not taken into consideration in either enacting the
Thurman Law, or passing on its constitutionality. It was at first
supposed that the half compensation for services and five per
cent of net earnings would more than pay the current interest,
and for that reason no other provision was made for its payment ;
but if the government fortunately did not need all the services
expected, was it a moral hardship for the companies to have to make
up the deficit in money, if they were able?

But from a purely legal standpoint, it is hard to say that the
decision is " good law." In its relations with the companies, the
United States acted in two capacities, that of sovereign and that
of individual ; in the former, it granted a charter ; in the latter,
it loaned bonds, payable, with accrued interest (less the credits
realized from services and percentage of net earnings), at the end
of thirty years. As sovereign, the United States could compel
the performance of certain public duties by the corporations, as
defined in the charter ; as individual, it was entitled to the repay-
ment of its loan at the time and in the manner specified in the
contract (charter). The United States had no lien on the income
or earnings of the corporation, except to the extent of the five
per cent provided for, and no reserved right to alter or amend
the charter could arbitrarily give to an individual creditor security
in addition to what he had taken by his contract. The Supreme
Court admit that the payment of the balance of accrued interest
and principal could not be required before the maturity of the
bonds, and particularly insist that the sinking fund remains the
property of the companies until applied in payment of some or
all of the debts. The Thurman Act is a statutory order for a
receivership, in a case in which the United States is plaintiff, and
the Union Pacific and Central Pacific defendants. Congress assum-

'See page io6 supra.

222 THE UNION PACIFIC RAILWAY.

ing to act as judge. Congress could no more lawfully sit in deter
niination of the rights of the United States, creditor, and Union
Pacific and Central Pacific, debtors, than it could try an ordinary
mortgage foreclosure case and order a receivership ; that is not
" due process of law,*' and Congress is not a court. Again, the
corporations had a vested right in their earnings until their debt
to the United States should be due ; if at that time its property
should be insufficient for the payment of its debts, improvident
creditors, who had not obtained adequate security, would have to
suffer ; if the corporation should be wasting its substance and
approaching insolvency, a proper proceeding for a receivership,
supported by a sufficient showing of the facts, would be available ;
but that is entirely a matter for the courts, and not for Con-
gress. Congress undoubtedly has power to make reasonable
regulations for the Union Pacific in the use of its franchise and
performance of its public functions, as in restricting its tariff for
freight and passengers, exacting periodical reports of its opera-
tions, requiring due care in the control of its trains, or compell-
ing it to operate the Omaha bridge as a part of its continuous
line, and not as a stub ; but Congress could not compel it to pay
to the United States, or any other creditor, a debt, or to put a
fund in the hands of a third party for that purpose, before its
maturity. The decision sanctions the usurpation by the legisla-
ture of the functions of the judiciary.

By careful computations it had been determined that if the
maximum amounts required by the Thurman Act to be paid into
the sinking fund should be promptly and fully paid and invested
in government bonds and the interest on the bonds compounded
semi-annually at five per cent, the amount accumulated in the
sinking fund by the time the subsidy bonds matured would be
sufficient to pay the government's claim. But several causes have
conspired to make the scheme, to a great extent, a failure. In
the first place, the definition of "net earnings" in the act has
been very materially modified by the Supreme Court in the "net

THE THURMAN ACT. 223

earnings cases "' by requiring that expenditures for ".new con-
struction and new equipment " be deducted from the gross earn-
ings, though interest on first- mortgage bonds should not be so
deducted, as required by the Thurman Act. The Central Pacific
has complied with the provisions, probably because its expendi-
tures for new construction and new equipment were insignificant ;
but the Union Pacific, under its policy of constructing branch lines,
has insisted on deducting such expenditures from its gross earn-
ings. The railways have had " hard times," too, and the maxi-
mum limit of the contributions to the sinking fund has not been
attained. In investing the sinking fund in government bonds,
the Secretary of the Treasury has been unable to obtain the
bonds in the market, except at a high premium ; for example,
April 6, 1 88 1, $198,000.00 was invested in currency sixes at a
premium of 35, $76,000.00 at a premium of 34.95, and $220,000.00
at a premium of 33.9. For considerable times large sums of
money have lain in the sinking fund uninvested ; in June, 1881,
the amount of such unproductive money was $935,328.52. In
1887, when some of the bonds had been called, it was estimated'
that the proceeds were actually less, including interest, than had
been originally paid out of the fund for the bonds. In 1880,
the average rate of interest earned by the sinking fund was only
from two and a half to three per cent.

After a few years operation showed that the sinking fund of
the Thurman Act was doomed to failure as a means of discharg-
ing the companies' debt to the government at its maturity, efforts
were made to substitute for it some plan that would make the
government secure. All the plans suggested were in two classes,
the one maintaining the sinking fund feature of the Thurman
Act, with the requirement of a larger percentage of net earnings,
the other contemplating the extension of the time of payment by
from forty to one hundred years, and the division of the gross
debt into annual or semi-annual payments ; opposed to both

* See pages 213-214, supra;

" See Report of United States Pacific Railway Commission, cited infra, page
224.

224 THE UNION PACIFIC RAILWAY.

plans wa^ the demand by a large western, anti -monopolistic con-
tingent for proceedings by the government for the immediate
forfeiture of the charters of all the bond aided Pacific railway
companies, and the assumption of their property and duties by
the government, if necessary in enforcing the payment of the
debt. But the Thurman Act has been supplemented by no fur-
ther legislation.

March 3, 1887, an act was passed creating the United States
Pacific Railway Commission, and in the following month Robert
E. Pattison, of Pennsylvania, E.. Ellery Anderson, of New York,
and David F. Littler, of Illinois, were appointed by President
Cleveland as its members. The commission were to investigate
fully the affairs of the bond aided railways, their relations to one
another, to the people, and to the government, and their internal
condition, management, and financial responsibility ; they were
to report the evidence taken, their findings, and recommenda-
tions. Their report was exhaustive, but as to their recommenda-
tions, Pattison (chairman) urged immediate proceedings for the
forfeiture of the companies' charters and a "winding up" of
their affairs, while Anderson and Littler proposed legislation
extending the time of payment of the debts to the government,
if agreed to by the companies, otherwise requiring a larger per-
centage of net earnings each year for the sinking fund.'

* See Reports of United States Pacific Railway Commission, Senate Execu
tive Documents, 50th Congress, 1st Session, No. 51.

CHAPTER VIII.

PRESENT AND FUTURE.

Under the operation of the Thurman Act, contributions to
the sinking fund assumed to be payments to the United States,
the debt of the Pacific railway companies to the nation is increas-
ing at the rate of nearly two million dollars a year. The amount
received from them in 1892 was only a little more than half the
amount paid out by the United States in interest on the subsidy
bonds, not to speak of their principal.' The subsidy bonds will
mature from January, 1895, to January, 1899, and the several
series of first-mortgage bonds issued by the companies will

'According to the Statement of the Public Debt, May i, 1893, the indebt-
ness of the companies is in the following condition :

Principal

out-
standing.

Interest

accrued and

not ^et

paid.

•

Interest paid

by the
United States.

Int. Repaid by Companies.

Name of Railway.

By trans-
portation
service.

By cash
payments :
5 p. ct. net

earnings.

Central Pacific

$25,885,130 00
6,303,000 00

27.236.512 00
1,600,000 00
1,970,560 00
1,638,320 00

$517,702 40

136,060 00

544,730 24

32,000 00

39,411 20

32,566 40

$38,207,073 67
9,723,043 09
40,483,662 25
2,461,808 26
2,791,468 14
2,392,439 89

$6,754,238 5
4,129,697 49

13.697,345 85

550,028 57

9,367 00

200,954 35

25.341,631 31

$658,283 26

438,409 58
6,926 91

Kansas Pacific

Union Pacific

Central Branch U. P... .
Western Pacific

Sioux City and Pacific

Totals

64,633,513 00

1,292,470 24

96,057,49s 30

1,103,619 75

Name of Railway.

Balance of inter-
est paid by the
United States.

Sinking Fund.

Bonds.

Cash.

Total.

Central Pacific

$30,794,552 36
5,592,345 60
26,346,906 82
1,904,852 78
2,782.101 14
2,191,485 54

$4,859,500 00

$587 76

$4,860,087 76

Kansas Pacific

Union Pacific

12,286,500 00

3.852 90

13,390,352 90

Central Branch U. P.. . .

Western Pacific

Sioux City and Pacific.

Totals

69,613,244 24

17,146,000 00

4,440 66

17,150,440 66

225

226

THE UNION PACIFIC RAILWAY.

mature in equal amounts Vind pari passu with the subsidy bonds.'
While the interest on the first-mortgage bonds has been kept
down, the un-reimbursed interest on the subsidy bonds will
amount, it is estimated, to at least $60,000,000.00 in 1899, and
added to the principal of $64,623,512.00 will make the total debt
of the companies to the United States about $125,000,000.00.
Of course, the companies will be unable to pay the debts when
they mature. And it hardly becomes a prudent creditor to waiti
until his debtor's debt is due to determine what he will do on his
failure to pay the debt, particularly when the debtor is sure to
be in default. What shall Congress do ? It seems plainly
necessary to take some action with little further delay. There
are thfee ways open to Congress by which to dispose of the
matter :

I. When the debt matures, the United States may foreclose
the lien reserved as security for the repayment of its debt, and if
the debt be not thus satisfied, direct proceedings may be resorted
to for the collection of the deficiency.

II. The sinking fund may be maintained, and a larger per-
centage of net earnings required to be paid into it, so that not
only current interest may be met, but even the principal of the
bonds may be gradually reimbursed.

III. The debt may be refunded at any time and definite

* The amounts of subsidy bonds maturing each year, for each company, are
as follows:

Union Pacific. .
Central Pacific.

Kansas Pacific.

Central Branch Union Pacific.

Sioux City and Pacific

Western Pacific

Total.

1895.

January i,
1896.

January i,
1897.

January i,
1898.

January i,
1899.

(Feb. i)

(Jan.' 1(5)

4,320,000

3,840,000

i5»9i9.Si2

3,157,000

2,362,000
(Nov. i)

1,600,000

2,112,000

10,614,120

9,197,000

640,000

1,440,000

2,800,000

1,423,000

640,000

• ■ • • •

320,000

320,000
1,628,320

1,650,560

3,002,000

8,000,000

9,712,000

29,904,952

14,004,560

Total.

27.236,512
25»885,i2o

6,303,000
1,600,000
1,628,320
1,970,560

64.623,512

The amounts of companies* bonds maturing each year will be the saVne as
those of government bonds, except in 1899, when the amount will be about
$7,000.00 less for the Union Pacific.

PRESENT AND FUTURE. 22;

periodical payments may be received from the companies in liqui-
dation of it.

In determining which of the three courses is best to follow,
several general considerations must be kept in mind :

I. The case is not exactly an ordinary one of creditor and
debtor, of lender and borrower, in which the rights of one and
the obligations of the other, are distinct and definite. The
United States thought, in 1862 and 1864, that only one thing was
more needed than the suppression of the Rebellion, and that was
a railway from the Mississippi Vallej to the Pacific Ocean. When
the inducements offered by the Act of 1862 were found to be
insufficient to attract individual effort to the enterprise, the new
inducements of the Act of 1864 were added. The opinion was
entertained by many capitalists and members of Congress that
the enterprise would never be a financial success and that the
loan of bonds would prove to be virtually a bonus. If the rail-
way had proved unable to earn expenses. Congress would
undoubtedly have come to its assistance, as a national necessity.
If no payment had been made on the principal or interest of the
bonds by reason of the vast expense of constructing and operat-
ing the line, the public disappointment would have been slight.
The strongest argument with Congress was that if the United
States expended no more in interest on subsidy bonds than it was
then costing the government to transport its troops, mails, and
munitions of war over the plains and mountains, there would
be nothing lost. If that view should be taken now, the nation
would be found to have driven a shrewd bargain, and to be now
saving each year in expenses of transportation more than enough
to overbalance both principal and interest of the subsidy bonds
at their maturity.' Though the argument was fallacious, yet if
Congress was influenced by it and made its contract in consid-

* According to a special report of the Secretary of War in 1861, the average
annual expense to the government of the transportation of its mails, troops,
supplies and munitions of war from the Mississippi to the Pacific was in excess
of $7,000,000.00. The annual interest on the subsidy bonds is $3,877,400.00 ; the
principal maturing in thirty years after issuance, $64,623,512.00, — an annual
average of $2,154,100.00.

228 THE UNION PACIFIC RAILWAY.

eration of it, ought it now to complain if it can not get all its
debt from the Pacific railway companies, when it was ready to
say in 1862 and 1864 that it would be satisfied if it should never
receive any of it? If the builders of the Pacific railway had
waited ten years before they began their work, they could have
done it at only one-half of the expense it cost them from 186410
1869 ; labor and material were expensive and gold at a premium
in 1865 ; the cost of the road was consequently inflated, to the
extent, at least, of the principal of the subsidy bonds ; as com-
pared with competing lines, the road would have been at a disad-
vantage, if it had had to repay current interest on the subsidy
bonds. If the United States insisted on having a Pacific railway
just when and where it was most expensive to build it, ought the
nation not to be willing to pay for having its whim humored,
instead of requiring its convenient debtor to yield back dollar
for dollar of his loan? If the enterprise proved more profitable
to its managers than had been expected, were the national inter-
ests less fully subserved by supplying what the Republican party
called the "imperative demand of the. whole people?"

On the other hand, the companies must remember that the
government subsidy was very liberal, much more liberal than it
would have been if Congress had known how exaggerated were
the difficulties of building the roads. If the railways were very
expensive, the companies made them more expensive by their
excessive haste in constructing them, when Congress had given
them ample time. They were amply compensated for their work,
unparalled though it was, by the enormous profits that they
received from it. The granting the subsidy was the result of a
highly excited state of the public mind, and the charter- con tract
was inspired rather by sentiment than by reason ; the early rela-
tions of the government and companies were not on a basis of
strict business, a view emphasized by the Supreme Court in the
" interest case." * Moreover, the companies, in their disagree-
ments with the government, have always exhibited an unusual

* United States vs. Union Pacific Railroad Company, 91 U. S. R., 79. See
pages 210-212, supra.

PRESENT AND FUTURE. 229

willingness to rely on the strict letter of the law, and have bested
the government because the courts would not permit it to read
between the lines of its contract an expression of the senti-
ments that prompted its execution ; the spirit and letter of the
Acts of 1862 and 1864 are neither identical nor in harmony ; may
the companies now ask in good conscience to be permitted to
tely on the spirit, and reject the letter, of the contract?

2. The course that Congress ought to take depends much on
what general attitude the national government ought to sustain
to railways and railway corporations. It was generally conceded
before i860 that the connection of the government with the
industries of the people should not be intimate ; " state interfer-
ence'' with industries was not favored. The preceding chapters
have shown the evils of such intimacy and interference ; most of
the tribulations of the Union Pacific (and of the government, too)
have come, not from its being worse managed or more dishonest
than othej railway companies, but from the constant intermed-
dling of the government and the resultant contumacy of the cor-
poration. One Congress has legislated without regard to the
spirit in which its predecessors have legislated on the same sub-
ject matter ; while the congressmen of 1862 and 1864 saw in the
Union Pacific only a national project to be accomplished through
the agency of patriotic individuals, the congressmen of 1873 saw
hardly more than a corrupt ring of men guiltily thriving at the
expense of a magnanimous government. Interference with indus-
tries for the purpose of fostering them, on the theory that they
are necessary elements of national prosperity, has done more to
undermine the foundations of the republican government of the
United States than any other policy it has sought to enforce.
The natural tendency of a democratic government to intermeddle
continually with the affairs of an enterprise that it has created, is
a serious impediment to its healthy prosperity. " Tinkering with
the tariff " (or apprehensions of it) causes a periodical stagnation
in many branches of industry, because it can not be foreseen what
a change of administration or overthrow of a party at the polls
will bring forth at Washington ; a large percentage of the people

230 THE UNION PACIFIC RAILWAY.

of the United States waste a good part of their time and substance
in " waiting to see what Congress will do," or " trying to make it
do." But this is a " large question." Suffice it to say that what-
ever legislation Congress may enact in settlement of the relations
of the Pacific railways to the government, it should be final, if
possible, and leave no further legislation necessary ; it should,
moreover, if possible, make the relations so remote that they will
be nearly the same as those of railways that have received no gov-
ernment bonds in aid of their construction. By all means, the
sovereign United States ought to avoid the future necessity of
frequent contests with its subjects in the courts, and the possible
humiliation of defeat, as in the past. The United States should
not attempt to operate a railway in competition with corporations
of citizens, unless it be absolutely necessary ; if ever American
social ideas be ripe for the ownership and operation of railways
by the state, then it will be time for a change of policy ; at pres-
ent, the ideas of the public are not compatible with state socialism
as applied to railways. If the United States will do justice
between railway corporations and between them and the people,
it will do all that society expects for a while.

3. In dealing with the Pacific railways, Congress must not be
too much affected by recollections of the Credit Mobilier, Jay
Gould, and the "Big Four" monopoly. The Pacific railway
companies are no worse than others. All railways, unfortunately,
have had their Credit Mobiliers, and all have had their Jay
Goulds. Watered stock and excessive incumbrances are unfor-
tunately not peculiar to the Union Pacific. If the United States
has been a sufferer, it is only because, in a moment of over-
heated sentiment, it put itself on a level with individual creditors
of railway corporations ; if the logic of the situation were to be
consistently applied, it would probably, like the average second-
mortgage bondholder, see the stale water boiled out of the Union
Pacific obligations over the heat of a receivership and fresh water
added by a "reorganization committee" of first-mortgage bond-
holders. If the United States has to suffer the consequences of
being in bad company, it is only what is expected of an Individ-

PRESENT AND FUTURE. 23 I

ual. The Union Pacific never could be the ideal railway that
Congress expected it to be ; it is only real now. The question
of the payment of its debt must be answered in the light of the
economic history of railways during the past thirty years.

4. It is a popular impression that the Pacific railway compa-
nies are wholly iniquitous, and that they have avoided doing
their duty whenever they could ; that moreover they have taken
unfair advantages of a liberal government. This is not strictly
true. The courts have usually decided that the companies
rightly interpreted the law, and when not, the companies have
always yielded ready compliance. They have certainly not been
more unreasonable than the government. The occasions on
which the government has violated the letter and spirit of the
Acts of 1862 and 1864 are as numerous as those on which the
railway companies have violated them. Failure to make volun-
tary provision for the payment of the debt to the United States
at its maturity was culpable, while the demand by the government
of the payment of current interest was unwarranted. Perhaps
earnings ought to have been put into a sinking fund for the
payment of debts instead of into branch lines, but the branch
lines were absolutely necessary, and in securing them the com-
panies performed a duty not imposed upon them. Likewise, in
constructing the main* lines, the companies provided even better
facilities for the accommodation of the public than had been con-
templated by their charter. If such lines as the Oregon Short
Line and Southern Pacific seem to be competitors of parts of the
Pacific railway and thus afford ground for a suspicion that the
managers have not done their duty to the creditor United States
by building competing lines, it will yet be found that they have
protected the Pacific railway, as a whole, from worse competition.
Nor must it be assumed that the Pacific railway companies have
had so much greater aid from the government than others. The
land grant of the Northern Pacific was better in quality and twice
as large, and those of the Illinois Central and other lines east of
the Missouri will be found (their superior quality being consid-
ered) to be even more liberal. Compared with tariff protected

232 THE UNION PACIFIC RAILWAY.

lumbermen, mine owners, manufacturers, sugar planters, and
sheep raisers, the United States ought to cancel the debt of the
Pacific railways and refund them what they have paid in on it.

5. The United States must preserve its sovereign dignity in its
dealings with the Pacific railway companies. Though the courts
have held that its rights under a contract must be subject to the
same construction as those of an individual in the same position,
it is yet a sovereign. Its dealings with these companies must
not degenerate into a squabble. It must act deliberately, even
liberally, but firmly, and with a full knowledge of all material
facts. There must be no " bickering." When the United States
discovers what policy is right, it must enforce it consistently and
without hesitation. If finally it should be necessary to take pos-
session of the Pacific railways and operate them rather than to
submit to the contumacious conduct of its creatures and subjects,
let it be done, even at great cost and expense ; a few millions of
money are of no consequence to the United States, when com-
pared with the preservation of the respect and obedience of its
subjects and creatures. The question is not merely of dollars and
cents ; the political question of the attitude of the United States
to its subjects is greater.

When the debt matures, the United States may foreclose the
lien reserved for the payment of its debt, and if the debt be not
thus satisfied, direct proceedings may be resorted to for the col-
lection of the deficiency.

When the first series of bonds mature, the debt will be about
$120,000,000.00, and the lien securing it will be subject to a first
mortgage securing $63,615,000.00 of companies' bonds. If the
subsi(iized lines should be sold under decree of court, they would
not bring more than enough to pay the first-mortgage bonds,' and

* In October, 1887, Richard P. Morgan, Inspecting Engineer for the United
States Pacific Railway Commission (supra, page 224), estimated the "cost of
reproducing " the Pacific railway substantially as follows :

PRESENT AND FUTURE.

233

the United States would either have to lose its claim or buy in
the lines and pay off the first- mortgage bonds/ If it should buy
in the lines, (i) What would it get? and (2) What would it do with
it after it got it?

I. In January, 1880, the Union Pacific, Kansas Pacific, and
Denver Pacific were consolidated under the name of the Union
Pacific Railway Company,' the stock of the consolidated company

Union Pacific, Omaha to Ogden

Terminals, Omaha and Ogden.

Total

Kansas Pacific, Kansas City to Denver. . .
Terminals, Kansas City and Denver.

Total

Central Branch Union Pacific.

Central Pacific and Western Pacific, Ogden to Oak-
land, via Sacramento, Stockton, Lathrop and

Niles, also Niles to San Jose .

Terminals, Sacramento, Oakland and San
Francisco ... .

Total

Sioux City and Pacific.

Grand Total, Lines.
Terminals . . .

Miles.

Cost of
Reproduc-
tion.

Average

Cost

per Mile

without

Terminals.

Average

Cost
per Mile

with
Terminals.

1039

$27»857.5oo

•

10,300,000

$26,8x4

$38,157,500

$36,728

639

$r4,907,870

7,000,000

23*315

$21,907,870

34,263

100

$2,004,000

30,040

20,040

892

$31,972,920

7,000,000

35,845

$38,972,920

43,693

104

$2,372,700

22,814

2774

$79,114,990

24,300,000

$28,530

$103,414,990

$37,280

See Reports of United States Pacific Railway Commission, Senate Execu-
tive Documents, 50th Congress, ist Session, No. 51, pages 4437 -4468.

' If the United States should buy in the properties and assume the pay-
ment of the first mortgages, the nation's investment would stand about as
follows :

Union Pacific

Kansas Pacific

Central Pacific

Western Pacific.

Sioux City and Pacific . . . .

Central Branch Union Pacific.

Total.

Miles of
Aided
Line.

1038
394
737
123
102
100

2494

Average per

Mile of
First Mort-
gage Debt.

$26,232
16,000

35."9
16,000

16,000

$25,907

Average per
Mile of Sub-
sidy Mort-
gage Debt
and Interest.

$40,306
30,5"
71,013
38,959
37,768
35,368

$47,465

Total Aver-
age Cost

per Mile to
United
States.

$66,538

46,5"
106,132

54,959
53,768
51,368

$73,372

Morgan's
Estimated

Cost

per mile of

Reprod'ction.

$36,728
34,263

j 43,693

22,814
20,040

$37,280

' The name of the original corporation was the Union Pacific Railroad
Company.

234 THE UNION PACIFIC RAILWAY.

being made equal in amount to the combined stock of the three
constituent companies. The stock of the Kansas Pacific and
Denver Pacific had been of little value, while the stock of the
Union Pacific had earned a good reputation in the stock market.
The two weak companies were controlled by Jay Gould, who was
also a director in the Union Pacific. Consolidation was in favor
with the majority of the Union Pacific management, but only on
the condition that shares of Union Pacific stock should be ex-
changed for shares in the consolidated company at a higher ratio
than shares of the two other companies, while Gould wanted the
exchange of stock to be share for share. Gould brought his fel-
low directors in the Union Pacific to his terms by purchasing the
Missouri Pacific and threatening to extend the Kansas Pacific
from Denver to Salt Lake City and to a connection with the
Central Pacific, thus forming a transcontinental competing line
that would probably ruin the Union Pacific. The Union Pacific
then inaugurated the policy of building branch lines and feeders
for the main line and leasing and controlling other lines until
now, while the main lines have a mileage of 1,777 miles and the
branch lines of 45 miles, the auxiliary lines aggregate 6,326
miles, controlled through ownership of stock, leases, and a variety
of relations.

In 1869, almost as soon as completed, the Western Pacific
(having absorbed the San Francisco Bay Railroad Company, with
a line from San Jos^ to San Francisco) was consolidated with the
Central Pacific under the name of the Central Pacific Railroad
Company.* Lines were built by the Central Pacific syndicate
until California and Oregon were under their control and the
Southern Pacific stretched across Arizona and New Mexico to El
Paso. All the new lines were leased to the Central Pacific. But
in 1885, a division was made of the California railroads, part of
them being retained by the Central Pacific and part being turned
over to the Southern Pacific Railroad Company ; then both sys-

* The name of the original corporation was the Central Pacific Railroad
Company of California.

PRESENT AND FUTURE. 235

tems were leased to a new corporation chartered by the state of
Kentucky and called the Southern Pacific Company.

The Central Branch Union Pacific (formerly the Atchi-
son and Pike's Peak, the assignee of the Hannibal and Saint
Joseph) was built to a point (Waterville) one hundred miles west
of Atchison, and there it ended without connections ; later a small
system of six branch lines aggregating about 290 miles was
spread out from the western terminus, consolidated, and leased
to it ; in 1880, the whole, having come under the control of Jay
Gould, was unloaded on the Union Pacific in the consolidation,
and by the latter then leased to the Missouri Pacific, probably to
prevent its becoming, directly or indirectly, a competitor of
either line. The intention of Congress in 1862 and 1864 had
been to have this line connect with the Kansas Pacific, but the
latter was permitted by the Act of 1866 to change its course
westward,' and the Central Branch failed to reach either the Kan-
sas Pacific or the Union Pacific.

The Sioux City and Pacific' was built for the sole purpose of
earning the government subsidy of land and bonds. Since 1884
it has been a local branch of the Chicago and Northwestern.^

All the branch lines have been built on the pattern of the
Union Pacific, in such a manner as to heap up bonded indebted-
ness, stock indebtedness, and obligations under leases and other
arrangements in a bewildering and incomprehensible mass. In
nearly all cases, the first-mortgage indebtedness is as much as the
lines have cost. Without the branches the main lines would be
bankrupt, and except as feeders of the main line, the branches
are of no value.

Since 1885 competition has affected nearly every part of the
original Pacific railway system. The California octopod, of
which the Central Pacific is a tentacle, has kept out competition
by covering all the competitive territory with lines that under
other control would be competitors for trans-continental traffic.

* See page 108 and Note, supra.
'See page 107 and Note, supra.
3 See map (2) showing the Pacific railway branches as planned and built.

236 . THE UNION PACIFIC RAILWAY.

The consolidation of the Union Pacific with the Kansas Pacific,
so onerous to the former, was the means of putting an end to
existing competition and preventing worse competition in the
future. The miserable Central Branch Union Pacific and Sioux
City and Pacific are mere appendages, for local business, to other
trunk lines, and have only the slightest connection with trans-
continental traffic. Immense sums have been paid by the Union
' Pacific to the Northern Pacific to keep it out of its territory, and
i the Oregon Short Line was built as a protection from the same
■ competitor, though it also incidentally diverts traffic from the
Central Pacific. Meanwhile the Burlington, Rock Island, Chi-
cago and Northwestern, Missouri Pacific and Great Northern
have projected their lines westward into Union Pacific territory
to the material detriment of the latter's earnings.

Of the lines aided by the government, all, with the possible
exception of the Central Branch Union Pacific, are maintained
in good condition and well equipped.

In the case of the United States vs, the Kansas Pacific Rail-
way Company,' it was decided that the lien of the United States
for the reimbursement of its subsidy attached only to such lines
or portions of lines as were built by the aid of it. Under this
ruling the Omaha bridge, and the stub of which it is a part,
would probably not be subject to the lien ; likewise the lines from
San Jos^ to San Francisco, and from Sacramento to Oakland ;
the Denver Pacific and Kansas Pacific west of the 394th mile-post,
would not be subject to the government's lien. Even the Sioux
City and Pacific forms its principal connection with the Chicago
and Northwestern over an unsubsidized link of five miles. The
lines covered by the lien would be as follows :

{a) Union Pacific, from Omaha to a point five miles west of
Ogden, . . . 1038 miles.

{b) Kansas Pacific from Kansas City to a point 394 miles west,
. . . 394 miles.

(^r) Central Pacific, from a point five miles west of Ogden, to
Sacramento, . . . 737 miles.

' 99 U. S. R. 455.

PRESENT AND .FUTURE. 237

(d) Western Pacific, from Sacramento to San Jos^, . . .
123 miles.

(e) Sioux City and Pacific, from Sioux City to California
Junction, Iowa, and thence to Fremont, Nebraska . . . 102
miles.

(/) Central Branch Union Pacific, from Atchison to Water-
ville, Kansas . . . 100 miles. Total, 2,494 miles.*

What else would the companies have to which the United
States could resort for the collection of the inevitable deficiency
judgment ? In building up their branch systems, the Union
Pacific and Central Pacific have in some cases built the lines
themselves ; in others, they have become the holders, for the
purpose of controlling the branches, of a considerable amount of
their stocks and bonds. The stocks have no substantial value,
but some of the first-mortgage bonds would be available.

In the case of the Union Pacific, all of its branch line stocks
and bonds, amounting to about $100,000,000.00 (face value),
estimated by competent financiers at a market value of $42,000,-
000.00, have been deposited with Drexel, Morgan and Company
as security for the company's floating debt of $20,000,000.00 and
future obligations not to exceed (together with the present float-
ing debt) $24,000,000.00. The owned branches could be bought
in under judicial sale, and the equities and rights of the com-
panies in controlled lines could be secured in the same way, by
the purchase under j udicial sale of the means through which the
control is exercised.

2. When the United States had thus become a full fledged
railway owner and operator, it might proceed ^to business.
A commission or board of managers would probably be neces-
sary, and Congress would probably average two investigating
committees each session. It could not well compete with private
citizens for traffic, yet it would have to do it. It would also need
some branch lines for an inlet to San Francisco, and for connec-
tions with other railways, as with the Chicago & Northwestern at
Missouri Valley, or possibly over the Omaha bridge, but with its

* See map (3) for relation of aided lines to main lines and branch lines.

238 THE UNION PACIFIC RAILWAY.

unlimited means and credit, it could have what it needed. It is
generally assumed that the United States would have only a dis-
jointed main line, without connections and branches, and would
have to operate it at a loss. But that is not necessarily true.
Many of the branches could be profitably lopped off, and many
of them would have no natural outlet except over the government
road. The business management of the government is not so
bad as it used to be, and perhaps the government railway would
be as well managed as the post-office. It is also assumed that
the corruptions of the civil service would even be aggravated on
a railway operated by the government ; such a danger has been
happily much lessened during the past ten years, and possibly
the management might be sufficiently removed from " politics "
to reduce the danger to a minimum. Nor is it necessarily true
that the road would be much more extravagantly managed by the
government than by a corporation. There would certainly be a
material saving in legislative incidentals, interest on excessive
bonded indebtedness, discounts and free transportation. It is
urged that all the states and municipalities that have dabbled in
railways have always failed to attain success in the railway busi-
ness and have sold out at a loss. A state cannot successfully
build railways in a settled community ; that is clearly shown by
the history of the Union Pacific, as well as by the experience of
Canada, American states and European nations. But state man-
agement of railways already built, has never been tried under
favorable conditions in the United States. If the United States
must operate the Pacific railway, either " to maintain its dig-
nity," or "to get even," let it give the experiment of state railway
management a fair trial ; failure is not inevitable.

But again, possibly it would be better for the United States
to lose the entire Pacific railway debt than to get "mixed up"
with the transcontinental railways through the management of
the Pacific railway and its branches. Certainly such a step could
be justified only as a last resort, in the event of a want of any
other satisfactory solution of the vexatious problem. The legis-
lation of 1862 and 1864 was a questionable departure from the

PRESENT AND FUTURE. 239

settled policy of the government, and public sentiment has not
fully approved it ; certainly there has been no tendency to follow
it as a fixed change of policy. Public sentiment is not prepared
for state ownership of railways, though it would probably approve
the state operation of the Pacific railway in a case of necessity.
In any event, such a necessity, in an extremity, must not be per-
mitted to be such a bugbear as to justify the government in
accepting unconscionable terms from the companies.

II.

The sinking fund may be maintained, and a larger propor-
tion of net earnings required to be paid into it, so that not only
current interest may be met, but even the principal of the bonds
may be gradually diminished.

The sinking fund in itself is a clumsy and unwieldy piece of
machinery ; instead of maintaining it, the money deposited should
go into the general funds of the Treasury of the United States,
and credit be given for it, with or without simple or compound
interest, as justice may demand. The railway companies should
not be made to suffer for the unskillful management of the
Thurman Act sinking fund ; whatever arrangement is made, they
should be allowed by the United States compound interest at six
per cent for the sums heretofore paid in from time to time.
After the subsidy debt has matured, a sinking fund will hardly be
necessary, and the payments in money or transportation may be
directly applied or set apart for the benefit of all creditors ; the
time is now so short, that the sinking fund would be available
only in tase of a definite extension of the time of payment of the
debt after its maturity. The use of the net earnings as a basis of
payments involves too many intricate questions of accounting,
even if the term can be defined ; the troubled past experience of
the government, courts and railway companies with the term justi-
fies its rejection as a basis of payments. In some respects, it
may appear fairer to the companies to expect of them payments
only in proportion to their earnings, but like most business men,
they themselves would prefer to make payments of definite

240 THE UNION PACIFIC RAILWAY.

amounts ; then they may always know what they have to meet
and make preparations accordingly. Besides, in the past, the
very natural suspicion that the companies were purposely keeping
their earnings down by diverting traffic to allied lines and by
distributing earnings on the basis of constructive mileage for
branch lines, has caused no end of ill feeling; future trouble
would doubtless be avoided by making payments no longer
dependent on net earnings.

III.

The plan that has found most favor with financiers is the
ascertainment of the worth of the debt at the time of settle-
ment, on some just basis, and the provision for its payment
in annual or semi-annual installments (usually in bonds) either
equal or in an ascending or descending ratio, all secured by a
lien or mortgage upon the present subsidized lines and upon as
much more property as the companies can offer for security.

The fairest plan for the ascertainment of the worth of the
debt is by adding all" amounts overdue (of which there will be
none until after the maturity of the first series of bonds, in Jan-
uary, 1895) with interest at two' per cent per annum, compounded
semi-annually, to such amounts as, with interest at six per
cent per annum, compounded semi-annually, will equal the pay-
ments not yet due, at their maturity. The amounts paid into
the sinking fund (except reinvested interest) at various times,
should then, with interest at six' per cent compounded semi-
annually, be deducted from the amount first found. The
remainder would be the present worth of the debt.

After the present worth were determined, it could be paid by
several series of bonds of equal amounts, bearing interest payable
annually or semi-annually, one series of bonds maturing each

* It is assumed that the government could borrow money at two per cent ;
the rate paid by the companies should be only sufficient to reimburse the
government.

'The rate should be only two per cent on so much of the sinking fund as
should be equal to the amount of debt to the government already matured at
any time, and computed only after such maturity.

PRESENT AND FUTURE. 24 1

year or each half year. As each succeeding year would find one
series of bonds less on which to pay interest, a scale of decreas-
ing payments would be the result. The first payments would,
however, be so much larger than the last, that they might prove
embarrassing to the companies, and on that account would be
objectionable. A sc^e of increasing payments, represented by
bonds, would be better, as giving the companies time and oppor-
tunity to adjust their management to the new conditions. But
better still would be a number of series of bonds, maturing semi-
annually, and so arranged in number or amount as to make
equal the semi-annual payments (including interest) by the com-
panies. As the government can obtain money at two per cent per
annum, it ought not to expect a higher rate on the companies*
bonds ; if the subsidy bonds had not yet matured, the difference
between two per cent and six per cent could be easily compen-
sated for. The several series of bonds should extend over a long
time, from sixty to one hundred years, according to the ability
of the companies to make payments.

Any such arrangement would have to be made conditional on
acceptance by the companies, but there is no difficulty appre-
hended in that regard. The best method of arrangement
would be by the appointment of a commission of responsible
citizens for conference with the companies and the recommenda-
tion to Congress of one or more refunding plans, or some other
plan, in case no reasonable refunding plan could be agreed on
with the companies or any of them.

The execution of trust deeds or mortgages by the compa-
nies (covering not only their subsidized lines but all their other
present and future real and personal property) to the Secretary
of the Treasury or some other public offiqer as trustee would pro-
vide the most convenient form of security, much better than the
indefinite statutory lien now provided.

The taking a new lien from the companies would either have
to be consented to by inferior lienees or mortgagees,* or it would

* See tables of funded indebtedness of Union Pacific and Central Pacific^
infra, pages 246 and 247.
16

242 THE UNION PACIFIC RAILWAY.

have to be taken conditionally in place of the present lien. All
present rights in the United States ought to be preserved for use
in the case of the failure of the new arrangement; else the
present lien might be subordinated to some other liens now infe-
rior to it.

If some plan such as the above may be devised, consistently
with the dignity of the United States, it is best that it be done.
The nation would lose nothing by it, but might gain much ; it
would avoid the dangerous necessity of trying to operate the
lines, and it would be just to the companies. If, however, some
such plan cannot be devised, it is folly to consider sinking fund
schemes and plans that contemplate the continued management
of the lines by the companies ; then it will be time for the
national government to assert its strength, foreclose its lien, take
possession of the lines, and operate them to the best possible
advantage, even at a loss.

If some settlement should be reached by the United States
with the bond aided Pacific railway companies, and its terms
should be fully complied with, their future course would probably
be very similar to those of other American railway companies ;
but if the United States should have to take possession of their
lines and operate them, the experiment, if successful, might be
productive of far reaching results. As for their past history, the
Union Pacific, as a type of them, has furnished the student of
American politics, history and economics more material for
study and reflection than any other factor of American indus-
trial life.

NOTE.

THE RECEIVERSHIP AND REORGANIZATION.

Since the foregoing chapters were written, the general
business depression of 1893, most keenly felt in the West, has
made the burdens of Union Pacific obligations too heavy to be
borne, and has forced the system into the hands of receivers.
On the 13th of October, 1893, on application of security holders,
an order was made in the the United States court at Omaha for
the appointment of S. H. H. Clark, of Saint Louis, Oliver W.
Mink, of Boston, and E. Ellery Andersony of New York, as
receivers ; in the following month, on application of counsel for
the United States, two additional receivers were appointed in
Frederick R. Coudert, of New York, and J. W. Doane, of
Chicago. Clark is president, and Mink vice-president of the
Union Pacific ; Anderson and Doane are government directors,
and Coudert also represents the interests of the United States,
and is likely to be appointed government director to fill an exist-
ing vacancy. The interests of the government seem to be amply
protected in the provisional management of the property.

Most of the Colorado lines and the Texas line (Fort Worth
and Denver City Railway), aggregating about 1500 miles of
lines and consolidated in 1890 under the subsidiary control of
the Union Pacific, Denver and Gulf Railway Company, have
been placed by the United States court at Denver in the hands
of separate receivers.

The concomitant "reorganization committee" of security
holders has also been formed (with Senator Calvin S. Brice,
chairman of the Senate Committee on Pacific Railroads, as
chairman) to devise a new basis for the management of the
property and an adjustment of the indebtedness to the govern-

243

244 THE UNION PACIFIC RAILWAY.

ment of such a nature, if possible, as to leave some crumbs of
future revenue for inferior lien holders. As the Union Pacific
system, under foreclosure sale, could not be sold for enough to
satisfy the debt to the government and the first mortgage debt
superior to it, whatever participation other lien holders may be
accorded in the future earnings of the system will be a gratuity to
them, and the reorganization ought to be effected, if at all, with
little reference to their desire to perpetuate their fictitious inter-
ests in the property; the extreme solicitude of first mortgage
bond holders for the welfare of holders of securities inferior to
the government lien is traceable to the considerable identity of
the two classes and their mutual interest in the leased, operated
and controlled lines of the system. But while the Union Pacific
system is an admirable property and fully capable of earning an
ample return on an unwatered valuation, it will hardly be abler
in the future than in the past to yield dividends and interest on
watered stocks, bonds, and guaranteed obligations five times the
actual value of its assets; it is now in the hands of receivers not
because it is incapable of sustaining itself on its legitimate traffic,
but because, like the great majority of American railways, it has
been burdened with obligations in such outrageous excess of its
' earning power that it is unable to carry them in a season of
general depression. Every dollar of future revenue expended
in payment of dividends and interest on watered stock and
bonds will make the government's security for its claim
more scant and necessitate a longer extension of the time
for its payment, while the commercial efficiency of the system
will tend to bear a direct ratio to its financial ability, and an
inverse ratio to the financial obligations imposed on it. The
holders of watered stock and bonds of the Union Pacific, not
reflected in the value of the property of the system, have no
rights in its revenue deserving of protection at the expense of
the nation as creditor, the public as patrons, or the system as
an instrument of social activity and prosperity. Whatever plan
of reorganization Congress may be called on to endorse, it is
plainly its public duty to demand that the amount of stock.

THE RECEIVERSHIP AND REORGANIZATION. 245

"bonds and other obligations on which the system will have to
pay future returns be approximated to the reasonable value of its
property.

Perhaps, too, — the hope will be indulged — each senator and
•congressman will be able to consider that in the adjustment of
the future relations of the Pacific railway to the government, the
nation, not some section, locality or business class, is his con-
stituency, and that the details of the adjustment may be more
safely arranged by Congress and the United States courts than
by "reorganization committees," even when they have United
States senators for chairmen.

246

FUNDED DEBT — UNION PACIFIC.

►3

S b

O B &

•2

E
O

vf 8
•2 Es c

c C O J-

S. I I EC

« (J B M «tf

•0*0 "S-o ^

BBS Bx

3
^ I

n > c

^ J^

c«

J
1

I ^E
8 no

c«

.c
u

E S^

B
3

§;.§§§§§ §§ § § nm I §§§§§§§§§

o^vo « o ^ moo

M ro M in « vO
« N i> ■♦ i> m

l> l> ♦

10 w

s "-

^00 VO 00 « M

M H in m lo i>
i> o m o VO

e< m H

vovooooovooo r<«

vOvO VO VO

l> l> l>vOvO

:35

in in m m m m ^ invo

o>o>mmeovoo» »«vo 00 o^ voovoov^ ^

00 00 00 00 o^oo 00 0000 00 00 000^0^ 0^00 00

2S 9v cSoo 60 (> o^ 0*00

00 00 00

mm S S MM S

2.2.

O O O Q «
m m m ^ M

O
en

**H000O>0m

£SS

K
H

. uc

vj e s c tfo.

VB 3 g O^

•2

• 2> «r tia
'^ ^E

G « 3 3 ** X B

5 c c.B-3 E S

la
O

E
1

£ -s

«c

* 'S
••" in

(2s

o
E

B
,0
*!fl
B
V

4^
»<

u
V

B
V

o
E

S2
u

.0
c

r
8

E E'en

1-8 1

ill

c«

iC
us

-g

B
B
4)
>»

•2
5

c c **
8SS>

B«iX<Jcq68cg

ka 4rf 4rf *< B ^^ a
cfl (« w ^ CO ^ «S

fc..^a 5 c g c g fl

** » 4) 4) 4) rt'O (8 ~

•"•^wEEEBaS
gg|s3'|:Sc:a

FUNDED DEBT— CENTRAL PACIFIC.

247

t/3

C
i>

E
g

'•i

a
2

*E
.2

c
.2

V
O

C«

C/3

B
O
M

c o
in '5

O S

2 •-»
e <u
i>

2
u

B
c«

.>§
"3
U

a
8

X
V

.8|

>
o

1/1

•a

B
A

'3
n

•o c5 6 d'2 j^ o d 0*2 "2 2 5

C "3
D

>« 8

^ ca

^ I

*"0 at « «
«- fi "O "O "O

gj5 B*j; B

hi »3 »3

B
C3

B
V

E
a

c/3

•g -g-s

B B B
A (8 f>

ctf cd ^

o o o
P^ CCOi

B
•gc/3

a o

iSo

2E
S 2

2; c/3

B
i>

a
o

<••

•O

pl$

••■ tit

3 C 5 Q

E-^ag

sg
o^

mil mil 1 1 II 1 1 1114 I

0> Oi o> M

^ 9 V **
* o» O" «r

moo

ctMMMm cnmcncnm

0000 vo

Ck \0\OvO\OvO vovOOvOvO tt vo in >n vo >n

vO vo vo vo

u
H

o.t:

CO ♦;

lO^OvO^O t<^ COOOOOOOCO 00 C* 00 Q vO 0>
OOOOOOOOOO OOOOOOOOOO ^ 00 O^Ov o^ ov

I
in

in ^ g'Pfi.

00 00 00 00

•M M M M

I
m

fO CO fO fO fn

CO fO fO fO fO

o
en

8 ^2'

o
m

O O O O
en en tn fn

K
H

(fl <« w w «

V V V v.v

« M « 5) M

•k M Ck •» •»

V V V V V
M bS &fl Ofl OiS

tr r t r

Q O O O O

E6 EEE

«rf ^ «rf «irf «rf

2,2.2.2.2

£ lib ib U« Cb

C :0

■ ca

B rt . rg
w <fl M aj >»««^ ifi

MMe«M(8 MM bt

oSoot/^o-^o

- - - -. "O -

E6 6 6*9 6'°E
.2.2.2.2-2.2 a 2

•o

c«

0) I lA
09 .-O

•>*n B
V V 9

mS ^

C«>i B

« X S
O V ^

B B J,

S,.2g,S

•O -O

U, (x«

B B

c3 «

•o

8
:.S.s-o

« « *

c« tt V
3 O OC/)

SSE^

*< «tf 2

•0 2 2-5

? i

o '
E

-4iv5-.j<il>'

Internet Archive Audio

Featured

Top

Images

Featured

Top

Software

Featured

Top

Texts

Featured

Top

Video

Featured

Top

Mobile Apps

Browser Extensions

Archive-It Subscription

Save Page Now

Full text of "The Union Pacific Railway; a study in railway politics, history, and economics"

See other formats